Deidra has owned and occupied her principal residence for 10 years.Two and one-half years ago she married Doug who moved into her house.Doug has never owned a home.When Deidra is transferred to another city, she sells the house and has a realized gain of $425,000.Deidra can exclude the realized gain from her gross income under § 121 if she and Doug file a joint return.

Question

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As per § 121, if a taxpayer owned and occupied their principal residence for at least two out of the five years preceding the sale, they can exclude up to $250,000 of the realized gain from their gross income ($500,000 if filing a joint return). In this case, Deidra owned and occupied the house for 10 years, and she is married to Doug, who has never owned a home. Therefore, if Deidra and Doug file a joint return, they can exclude the realized gain of $425,000 from their gross income under § 121, making the statement true.

Deidra Has Owned and Occupied Her Principal Residence for 10