Question

On November 1, 2014, Jamie (who is single) purchased and moved into her principal residence. In early 2015, Jamie was laid off from her job. On February 1, 2015, Jamie sold the home at a $35,000 gain. She sold the home because she found a new job in a different state. How much of the gain, if any, may Jamie exclude from her gross income in 2015?

A. $0
B. $3,125
C. $31,250
D. $35,000

Answer 1

Jamie may be able to exclude the entire $35,000 gain from her gross income in 2015.

Step-by-step explanation:

In general, when a taxpayer sells a home, any capital gain from the sale is subject to taxation. However, there are certain exceptions for the exclusion of gain from the sale of a principal residence. According to the IRS, if a single taxpayer sells their principal residence and meets specific requirements, they may be able to exclude up to $250,000 of the gain from their gross income. In Jamie's case, since she meets the ownership and use requirements (purchased and lived in the home for at least 2 years), she may be able to exclude the entire $35,000 gain from her gross income in 2015.