Question

Lucy lived in a five-unit apartment building that she purchased in 1995 for $60,000. Lucy rented out the other four apartments in the building. Lucy had taken depreciation of $24,000 on the rented portion of the building. In 2016, she sold the building for $250,000 and purchased a new personal residence for $90,000. How much gain on the sale of the personal portion of her residence must Lucy report on her 2016 return? I think the answer is ZERO because personal portion gain as the questions refers to is exempt under iRC121 if not what is correct answer. first thought was 160 but i think that is wrong?

Answer 1

Gross income shall not include gain from sale of property if during the 5 year period ending on date of sale if such property has been owned and used by taxpayer as the taxpayer's principal residence for period aggregating 2 years or more.

Condition for not to include that type of gain is that sale price shall not exceed $250000

In this question lucy's gain on personal portion shall be exclude from gross income. Because lucy satisfied all the conditions such as

1. She is living in house for more than 2 years.

2.Gross sale is not exceeding 250000