New Jersey Real Estate Exam Practice Question
A couple who sell their principal residence may take up to $500,000 in federal capital gains tax-free only if
Correct Answer: D
Rationale: To qualify for the federal capital gains tax exclusion on the sale of a principal residence, the couple must have owned and occupied the home for at least 2 of the previous 5 years. This requirement ensures that the home was genuinely their primary residence, allowing them to benefit from the exclusion.
Option A is incorrect as age does not affect eligibility for this exclusion. Option B is misleading; while buying a replacement home may have tax implications, it is not a requirement for the exclusion. Option C is also wrong; prior use of the Homesellers Exclusion does not disqualify them if they meet the ownership and occupancy criteria.
Unlock All Questions
Subscribe to Premium for full access to all practice questions, detailed rationales, and performance tracking.
Subscribe Now