This year, Leron and Sheena sold their home for $783,000 after all selling costs. Under the following scenarios, how much taxable gain does the home sale generate for Leron and Sheena? (Leave no answer blank. Enter zero if applicable.)
Leron and Sheena bought the home five years ago for $348,000. They lived in the home for three years until they decided to buy a smaller home. Their home has been vacant for the past two years.
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Question & Answer: This year, Leron and Sheena sold their home for $783,000 after all selling costs. Under the following scenarios,…..
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What is the taxable gain?
Despite not living in the house the past 2 years, Leron and Sheena still meet the 2-year ownership and 2-year use tests, and therefore they may exclude up to $348,000 gain on sale. Thus Leron and Sheena may exclude the entire $435,000 gain realized on sale ($783,000 – $348,000).