Shantel owned and lived in a home for five years before marrying Daron. Shantel and Daron lived in the home for two years before selling it at a $700,000 gain. Shantel was the sole owner of the residence until it was sold. What is the maximum amount of gain that Shantel and Daron may exclude?
A)$0.
B)$250,000.
C)$500,000.
D)$700,000.

Question

Quizplus · Accepted Answer

Shantel owned and lived in the home for at least two years before selling it, which qualifies her for the primary residence exclusion. As a married couple filing jointly, Shantel and Daron can exclude up to $500,000 of the gain on the sale of their primary residence. Since the gain was $700,000, they can exclude the maximum amount of $500,000 and will have to pay taxes on the remaining $200,000. Therefore, the best choice is (C) $500,000.

Shantel Owned and Lived in a Home for Five Years