Question

Aaron and Melissa are looking to sell their house for $700,000. They purchased the house seven years ago for $480,000 and didn't have any adjustments to factor in. If Aaron and Melissa sell their house for $700,000, how much will they have to pay in capital gains?* $700,000. Married couples are required to pay capital gains on the final sales price.* $0. The $500,000 capital gains exclusion will allow them to write off any profits earned on the property.* $0. Capital gains is only paid on commercial properties.* $220,000. All sellers have to pay capital gains on the sales price minus the price they originally paid.

Answer 1

Capital Gains Tax on Home Sales

Your home is considered a capital asset, subject to capital gains tax.

If your home has appreciated in value, you could be required to pay taxes on the profit.

However, thanks to the Taxpayer Relief Act of 1997, most homeowners are exempt. Married couples enjoy a $500,000 exemption.

Thus, according to the conditions of the problem it looks like the second choice best approaches to the real situation.