Dawn (single) purchased her home on July 1, 2007. On July 1, 2015 Dawn moved out of the home. She rented out the home until July 1, 2016 when she sold the home and realized a $230,000 gain (assume none of the gain was attributable to depreciation). What amount of the gain is Dawn allowed to exclude from her 2016 gross income?

Question

Quizplus · Accepted Answer

Dawn meets the ownership and use tests even though she did not live in the home at the time of the sale so she qualifies for the full exclusion. Further, the nonqualified use provision does not apply because she did not move back into the home before selling it.

Dawn (Single) Purchased Her Home on July 1, 2007