PSI New Jersey Real Estate State Practice Exam

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Prepare for the PSI New Jersey Real Estate State Exam. Study with flashcards and multiple choice questions, each with detailed hints and explanations. Get ready to succeed on your exam!

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What is the maximum tax-free capital gain for a married couple selling their long-time home, according to IRS regulations?

$250,000
$500,000
$350,000
$400,000

The correct answer is: $500,000

When a married couple sells their primary residence, they can exclude up to $500,000 of capital gains from taxation, provided they meet certain conditions set by the Internal Revenue Service (IRS). To qualify for this exclusion, both spouses must have owned the home for at least two years, and they must have lived in the home as their principal residence for at least two out of the five years preceding the sale. This provision allows homeowners to benefit significantly from rising property values without being burdened by capital gains taxes, which can be substantial. The $500,000 exemption applies only to married couples filing jointly; individual sellers have a lower exclusion limit of $250,000. Thus, the IRS regulation providing this generous exclusion for married couples selling their long-time homes makes the correct answer $500,000.