Dawn (single)purchased her home on July 1, 2009. On July 1, 2019, Dawn moved out of the home. She rented out the home until July 1, 2020, when she sold the home and realized a $230,000 gain (assume none of the gain was attributable to depreciation). What amount of the gain is Dawn allowed to exclude from her 2020 gross income?

Question

Quizplus · Accepted Answer

Dawn can exclude up to $250,000 of the gain from the sale of her primary residence if she owned and used the home as her principal residence for at least 2 out of the 5 years preceding the sale. Since she lived in the home from July 1, 2009, to July 1, 2019, and sold it on July 1, 2020, she meets the ownership and use tests. Therefore, she can exclude the entire $230,000 gain from her gross income.

Dawn (Single)purchased Her Home on July 1, 2009