On November 1, year 1, Jamie (who is single)purchased and moved into her principal residence. In the early part of year 2, Jamie was laid off from her job. On February 1, year 2, Jamie sold the home at a $45,500 gain. She sold the home because she found a new job in a different state. How much of the gain, if any, may Jamie exclude from her gross income in year 2?

Question

Quizplus · Accepted Answer

To qualify for the exclusion of up to $250,000 ($500,000 if married filing joint) of gain on the sale of a principal residence, the taxpayer must have owned and used the property as their principal residence for at least 2 out of the 5 years prior to the sale. Jamie has met both requirements as she owned and used the property as her principal residence for 15 months in year 1 and part of year 2. Therefore, she may exclude up to $31,250 of the gain ($45,500 * 15/27).

On November 1, Year 1, Jamie (Who Is Single)purchased and Moved