Michael (single)purchased his home on July 1,2009.He lived in the home as his principal residence until July 1,2017,when he moved out of the home,and rented it out until July 1,2018,when he moved back into the home.On July 1,2019,he sold the home and realized a $300,000 gain.What amount of the gain is Michael allowed to exclude from his 2019 gross income?

Question

Quizplus · Accepted Answer

Under the current tax laws, a taxpayer can exclude up to $250,000 ($500,000 for married taxpayers filing jointly) of the gain from the sale of a principal residence if they have owned and lived in the home for at least two out of the five years preceding the sale. In this case, Michael meets this requirement as he owned and lived in the home as his principal residence for eight years (from July 1, 2009 to July 1, 2017). Therefore, he can exclude up to $250,000 of the $300,000 gain from his gross income.

Michael (Single)purchased His Home on July 1,2009