Ethan (single) purchased his home on July 1,2004.On July 1,2011 he moved out of the home.He rented the home until July 1,2013 when he moved back into the home.On July 1,2014 he sold the home and realized a $210,000 gain.What amount of the gain is Ethan allowed to exclude from his 2014 gross income?

Question

Quizplus · Accepted Answer

Ethan is allowed to exclude $250,000 of gain from the sale of his home because he owned and used the home as his main residence for at least 2 of the 5 years preceding the sale. However, because he rented the home for 2 years during that period, he is only allowed to exclude $168,000 of the gain (2/5 x $250,000).

Ethan (Single) Purchased His Home on July 1,2004