Module 6: Valuation and Sale of the Marital Home Flashcards
What amount of gain can single taxpayers generally exclude upon the sale of their principal residence?
$250,000
Sally and Marty are divorcing. Sally is going to buy out Marty’s interest in their marital home. Which of the following is typically the best way to accomplish this?
The best way to accomplish this would be to require Sally to refinance the mortgage and Marty to take another asset equal in value to the equity in the home.
Vicki and David are selling their residence, which they have lived in and owned for three years. They are still married. What amount are they eligible to exclude from capital gains?
As a couple, they qualify for a $500,000 exclusion. The couple must live in their residence for two of the last five years to qualify for the exclusion.
If both spouses are going to continue to own the home jointly after the divorce, although only one of them will continue to live in the house, then the resident spouse should pay 100% of which of the following expenses?
A) Minor repairs
B) Major repairs
C) Mortgage payments
D) Improvements
A) Minor repairs
Minor repairs should be paid by the resident spouse, since his or her use may have created the need for these repairs.
Harriet and Marcus are selling their residence, which they have lived in for one year. They are still married. What amount are they eligible to exclude from capital gains?
They only lived in their house for one year, so they do not qualify for the gain exclusion.
Linda and Jeff bought a home for $100,000. When they divorced three years later, the home was worth $300,000. They did not have a mortgage on the home. Linda bought Jeff out of his share by paying him $150,000. What is Linda’s basis in the home?
Linda gets Jeff’s basis in the home, which is the original price that Jeff paid for the house.
Sellers are limited in how often they can sell a house and qualify for the gain exclusion. Which of the following does NOT qualify as one of the exceptions to this limitation?
A) The seller changes employment.
B) The seller has health issues.
C) The seller experiences an unforeseen circumstance.
D) The seller has a new baby.
D) The seller has a new baby. ?
Adam and Mary used and owned their residence during their eight-year marriage. If Mary has the right to possession of the residence until it is sold in six years, Adam qualifies for the capital gain exclusion for the sale of the residence under what conditions?
According to the use period rules, Adam can use Mary’s “use period” to qualify for the exclusion as long as he continues to own the residence.
How often can the exclusion from capital gains tax upon the sale of the principal residence generally be used?
The exclusion is allowed for one sale every two years.
Wilma is transferring her interest in the marital residence to her former husband, Fred, by quitclaim deed. Which of the following will happen to the mortgage?
She will remain liable for the mortgage on the residence.
Even though Wilma’s name is off the deed, it remains on the mortgage. Wilma is still liable if Fred decides to stop making the payments.
