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 $322,500 gain. What amount of the gain is Michael allowed to exclude from his 2020 gross income?

Question

Quizplus · Accepted Answer

Michael meets the ownership and use tests for the exclusion. He owned the home for at least two years (2010-2020) and lived in it as his principal residence for at least two years (2010-2018 and 2019-2020). The maximum amount of gain he can exclude is $250,000 since he is single. Therefore, the answer is choice C.

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