Ethan (single) purchased his home on July 1, 2008. He lived in the home as his principal residence until July 1, 2015 when he moved out of the home and rented it out until July 1, 2017 when he moved back into the home. On July 1, 2018 he sold the home and realized a $210,000 gain. What amount of the gain is Ethan allowed to exclude from his 2018 gross income?

Question

Quizplus · Accepted Answer

Ethan's post 2008 nonqualified use is 2 years. He owned the property for 10 years so he is not allowed to exclude 20% of the gain ($210,000 × 20% = $42,000). He is allowed to exclude $168,000 ($210,000 minus $42,000).

Ethan (Single) Purchased His Home on July 1, 2008