California Real Estate Practice Exam

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Prepare for the California Real Estate Exam. Study with flashcards and multiple-choice questions, each question includes hints and explanations. Get ready to ace your exam!

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A single owner who resides in a home for two of the last five years is entitled to a capital gains exclusion of:

$100,000
$200,000
$250,000
$500,000

The correct answer is: $100,000

The capital gains exclusion for a single owner who has lived in their home for two of the last five years is $250,000. This exclusion applies to the sale of a primary residence and allows homeowners to avoid paying taxes on the first $250,000 of capital gains realized from the sale. This benefit is anchored in the Taxpayer Relief Act of 1997, which was designed to provide tax relief for individuals selling their principal residence. To qualify for this exclusion, the homeowner must meet specific criteria, including the ownership and use requirements. In this case, since the homeowner has resided in the property for the necessary period, they can take advantage of the exclusion. For couples who file jointly, this exclusion is increased to $500,000, reflecting the combined ownership and residency criteria. Therefore, the correct understanding of the single ownership capital gains exclusion reflects the established $250,000 threshold for individual homeowners.