Donald sold his primary residence for $198,425 after owning it for seven years. His profit on the sale was $24,500. The long-term capital gains tax rate is 0 percent for those in the 10 or 12 percent tax brackets, 20 percent for those with taxable income over $434,550 (single), and 15 percent for everyone else. If Donald is in the 35 percent tax bracket, how much tax will he owe on the listed transactions? (Round to the nearest whole dollar.)

Question

Quizplus · Accepted Answer

Donald qualifies for the home sale exclusion, which allows him to exclude up to $250,000 of profit from the sale of his primary residence from capital gains tax, as he has owned and lived in the home for at least two of the last five years. Therefore, he owes $0 in taxes on the sale.

Donald Sold His Primary Residence for $198,425 After Owning It