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Questions and Answers
A married couple bought a home ten years ago for $400,000. Their neighborhood has rapidly grown in popularity, and they were able to sell their home this year for $950,000. How much of that money will they be required to pay capital gains tax on?
A married couple bought a home ten years ago for $400,000. Their neighborhood has rapidly grown in popularity, and they were able to sell their home this year for $950,000. How much of that money will they be required to pay capital gains tax on?
Which listing type provides a commission to the broker only if their activities result in a sale?
Which listing type provides a commission to the broker only if their activities result in a sale?
Where can homeowners purchase flood insurance from?
Where can homeowners purchase flood insurance from?
If a listing is 'exclusive right-to-sell', what does it mean?
If a listing is 'exclusive right-to-sell', what does it mean?
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What happens if the gains from selling a home exceed the capital gains tax exemption?
What happens if the gains from selling a home exceed the capital gains tax exemption?
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Who typically provides flood insurance to homeowners?
Who typically provides flood insurance to homeowners?
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Study Notes
Capital Gains Tax Exemption
- A married couple can claim a $500,000 capital gains tax exemption on the sale of their primary residence
- The exemption is calculated by subtracting the original purchase price from the sale price
- In this scenario, the couple sells their home for $950,000 after buying it for $400,000, resulting in a gain of $550,000
- The gain above the exemption ($550,000 - $500,000) is $50,000, which is subject to capital gains tax
Types of Listings
- An open listing provides a commission to the broker only if their activities bring about a sale
- This type of listing does not guarantee a commission to the broker unless they are directly responsible for the sale
Flood Insurance
- Flood insurance can be purchased only from the National Flood Insurance Program (NFIP)
- The NFIP is the sole provider of flood insurance to homeowners
- Private insurance companies, state-owned insurance companies, and the Federal Emergency Management Agency (FEMA) do not provide flood insurance
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Description
Test your knowledge on capital gains tax calculations with this quiz. Calculate how much of the profit from selling a home is subject to capital gains tax.
