How much capital gain may a married couple filing jointly exclude on the sale of their primary residence?

The correct response reflects the tax code provisions related to capital gains on the sale of a primary residence. Under the current tax law, a married couple filing jointly can exclude up to $500,000 in capital gains from the sale of their primary residence, provided certain conditions are met.

To qualify for this exclusion, the couple must have owned and used the property as their principal residence for at least two of the five years preceding the sale. This benefit is designed to encourage home ownership and assist families in managing their financial investments in real estate.

The exclusion applies to the gain from the sale, which is the difference between the selling price and the adjusted basis of the home. It’s important for homeowners to understand this provision, as it significantly affects their tax liability and can promote more favorable financial outcomes when selling their primary residence.