Gary, who is single, sells his principal residence (owned and occupied by him fo
ID: 2531932 • Letter: G
Question
Gary, who is single, sells his principal residence (owned and occupied by him for seven years) in November 2016 for a realized gain of $148,000. He had purchased a more expensive new residence eight months prior to the sale. He anticipates that he will occupy this new house as his principal residence for only about 18 additional months. He expects it to appreciate substantially while he owns it. Gary would like to recognize the realized gain on the 2016 sale to off- set a large investment loss from the sale of stock. Can he recognize the realized
gain of $148,000 on the sale of his principal residence in 2016?
Explanation / Answer
The sale of Grays principal residence in November 2016 Qualifies for the 121 exclusion.under the provision of the act, none of gray's Realized Gain of $ 148000 Recognized. Gray can Elect to Forgo the 121 Exclusion. in this case, his/her recognized gain is $1,48,000 making this election to forgo this election is beneficial because gray is planning on selling his new principal residence within 18 Months and the realized gain is planned to be larger than $1,481000.
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