Question

An individual client purchased his residence 5 years ago for $300,000. For 3 of the last 5 years, the client rented out the property for income, and lived in the house of 2 of those years. The client sells the house for $500,000. How much of the gain is taxable?

Answer 1

their taxable long-term capital gain is zero.

Step-by-step explanation:

The client was living there for two years, so it will have a tax exempt of 250,000

purchase at 300,000 sale at 500,000 = 200,000 - 250,000 = 0 taxable gain

This exclusion will be available in any house the person was living at least 2 years of the last 5 years.