Property OwnershipIntermediateCalifornia Exam

A California homeowner has lived in their primary residence for 2 of the past 5 years and is selling it. What is the maximum federal capital gains exclusion available to a single filer?

A$125,000
B$250,000Correct
C$500,000
DNo exclusion is available

Why $250,000 Is Correct

Answer B: $250,000

Under IRC Section 121, a single taxpayer may exclude up to $250,000 of capital gain from the sale of a primary residence, provided they owned and used it as their principal residence for at least 2 of the 5 years preceding the sale. Married couples filing jointly may exclude up to $500,000.

Exam Tip: Property Ownership

Property ownership questions test the bundle of rights and different forms of ownership. Know the differences between joint tenancy, tenancy in common, and community property, including the right of survivorship.

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