Michael (single)purchased his home on July 1, 2010. He lived in the home as his principal residence until July 1, 2018, when he moved out of the home, and rented it out until July 1, 2019, when he moved back into the home. On July 1, 2020, he sold the home and realized a $300,000 gain. What amount of the gain is Michael allowed to exclude from his 2020 gross income?

Question

Quizplus · Accepted Answer

Michael can exclude up to $250,000 of the gain from the sale of his home since he owned and used the home as his principal residence for at least 2 of the 5 years prior to the sale. The period of time that he rented out the home does not affect his eligibility for the exclusion. Therefore, the correct answer is (C) $250,000.

Michael (Single)purchased His Home on July 1, 2010