New Jersey Real Estate Practice Exam Free 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 tax benefit is available to those who have made the property their primary residence over a significant period.
Option A is incorrect; age is not a factor for the exclusion amount. Option B is misleading, as purchasing a new home is not a requirement for the exclusion. Option C is also wrong; prior use of the Homesellers Exclusion does not disqualify them from claiming it again if they meet the ownership and occupancy criteria.
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