A Minnesota homeowner bought their home for $225,000 and sold it 7 years later for $310,000. After paying $18,500 in selling costs, what was their net gain?

Explanation

Gross gain = $310,000 - $225,000 = $85,000. Selling costs = $18,500. Net gain = $85,000 - $18,500 = $66,500. For federal income tax, single homeowners can exclude up to $250,000 of capital gain (married filing jointly up to $500,000) if they meet the ownership and use tests. Most Minnesota homeowners selling their primary residence owe no capital gains tax.