Jerry bought his home 15 years ago for $60,000. Three years ago, Jerry married Debbie and she moved into the same house and has lived there since. If they sell Jerry's house in the current year for $340,000, what is their taxable gain on a joint tax return?

Question

Quizplus · Accepted Answer

The taxable gain on the sale of a primary residence can be excluded up to $250,000 for single filers and $500,000 for married couples filing jointly, provided the ownership and use tests are met. Since Jerry owned the house for more than 2 years and it was his primary residence for at least 2 of the last 5 years, and Debbie also lived there for at least 2 years, they meet the criteria. The sale price ($340,000) minus the purchase price ($60,000) equals a gain of $280,000, which is below the $500,000 exclusion limit for married couples filing jointly. Therefore, their taxable gain is $0.

Jerry Bought His Home 15 Years Ago for $60,000