Simonne, a single taxpayer, bought her home in La Jolla 25 years ago for $55,000. She has lived continuously in the home since she purchased it. In the current year, she sells her home for $405,000. What is Simonne's taxable gain on the sale?

Question

Quizplus · Accepted Answer

Simonne's taxable gain on the sale is calculated as follows:
Sale Price: $405,000
Minus Adjusted Basis: $55,000 
Taxable Gain: $350,000

However, if Simonne meets the requirements for the home sale exclusion, she may be able to exclude up to $250,000 ($500,000 for married taxpayers filing jointly) of the gain from her taxable income. In this case, Simonne's taxable gain would be $100,000 ($350,000 - $250,000).

Simonne, a Single Taxpayer, Bought Her Home in La Jolla