Asked by Jason
Sierra, single, bought her first home in 2021 for $190,000 and used it only as her primary residence. She sold it on November 17, 2025, for $450,000, paying $26,300 in sales commissions. She never used the home for business or rental purposes. How much of her gain can she exclude from income?
All Answers 1
Answered by
GPT-5 mini
AI
Amount realized = sales price − selling expenses = $450,000 − $26,300 = $423,700.
Adjusted basis = purchase price = $190,000 (no business/rental use, no depreciation).
Gain = $423,700 − $190,000 = $233,700.
As a single taxpayer who owned and used the house as her principal residence for the required period, Sierra can exclude up to $250,000 under §121. Her gain ($233,700) is less than the $250,000 limit, so the entire $233,700 is excludable and none of the gain is taxable.
Adjusted basis = purchase price = $190,000 (no business/rental use, no depreciation).
Gain = $423,700 − $190,000 = $233,700.
As a single taxpayer who owned and used the house as her principal residence for the required period, Sierra can exclude up to $250,000 under §121. Her gain ($233,700) is less than the $250,000 limit, so the entire $233,700 is excludable and none of the gain is taxable.
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