Chapter 14 student F 2010

Chapter 14 student F 2010 - CHAPTER 14 TAX CONSEQUENCES OF...

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Unformatted text preview: CHAPTER 14 TAX CONSEQUENCES OF HOME OWNERSHIP Gain Exclusion 121 exclusion of up to $250,000 of gain on the sale of a principal residence ($500,000 on joint return) Taxpayer must own and use as principal residence for at least 2 years during the 5 year period ending on date of sale Exclusion Example When Tyler and Jasmine were married, Jasmine moved into Tylers home located in Denver, Colorado. Tyler had purchased the home two years before the marriage. After the marriage, the couple lived in the home together as their principal residence for three years before selling the home to move to Chicago. Tyler was the sole owner of the home for the entire five years he resided in the home. Would gain on the sale of the home qualify for the exclusion available to married couples filing jointly even though Jasmine was never an owner of the home? Exclusion Example Assume that when the Jeffersons moved from Denver, they purchased a home in Chicago for $275,000 and moved into the home on July 1 of year 0. In January of year 1, Tyler accepted a work opportunity with a different employer located in Miami, Florida. On February 1 of year 1, the Jeffersons sold their home for $425,000 and permanently relocated to Miami. How much of the $150,000 realized gain ($425,000 - $275,000) on their home sale would the Jeffersons recognize at at what rate would the gain be taxed? Interest Deductibility Indebtedness secured by the principal residence and one other residence (qualified residences) Acquisition or home equity indebtedness...
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Chapter 14 student F 2010 - CHAPTER 14 TAX CONSEQUENCES OF...

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