New Jersey Real Estate Practice 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 last 5 years. This requirement ensures that the exclusion is applied to homes that have been genuinely used as a primary residence.
Option A is incorrect because age does not affect eligibility for the exclusion. Option B is misleading; while purchasing a new home can be beneficial, it is not a requirement for the tax exclusion. Option C is also wrong, as prior use of the Homesellers Exclusion does not disqualify them from claiming it again, provided 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