Real Estate Math
A North Dakota homeowner has owned their primary residence for 3 years and is selling it. The gain is $75,000. What is the federal capital gains tax exclusion available to a single homeowner?
A$0; all gains are taxable
B$75,000; they are below the exclusion limit
C$250,000 exclusion; the entire gain is excluded✓ Correct
D$500,000 exclusion (married filing jointly)
Explanation
Under IRC Section 121, a single homeowner who has owned and used the property as their primary residence for at least 2 of the last 5 years may exclude up to $250,000 of capital gain from income tax. A $75,000 gain is fully excluded.
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