Home Sales and Foreclosures: Tax Breaks and Alternatives (80580)

This course deals with tax incentives for selling a home, other ways to use homes to generate cash or income without selling, and relief for those who lose their homes. It looks at key provisions, developments, and potential changes on the horizon that will affect individuals and businesses.


Final Exam

1.  If a homeowner acquires a residence in a like-kind exchange, how long must the home be owned and used as a principal residence in order to qualify for the full home sale exclusion:
a.One year
b.Two years
XXc.Five years
2.  If a homeowner who meets the two-year ownership and use test sells his home after 2008 and there is any nonqualified use, what is the tax result?
a.No part of the gain is eligible for the home sale exclusion.
XXb.The portion of the gain allocated to periods of nonqualified use does not qualify for the home sale exclusion.
c.The full exclusion can be claimed because the home was owned prior to 2009.
3.  Two unmarried people, each of whom meets the two-year ownership and use test, jointly own a home that is sold for a profit of $600,000. What is the tax result?
XXa.Each can exclude up to $250,000 on their returns.
b.Each can exclude up to $300,000 on their returns.
c.Only one $250,000 exclusion is allocated between them.
4.  A home is sold after one year of owning and living there. A partial exclusion is allowed if the sale resulted from:
a.Winning the lottery
XXb.An unforeseen circumstance or natural disaster
c.No longer enjoying home ownership
5.  Which of the following statements is not correct?
a.No loss is allowed on the sale of a personal residence.
b.The basis in the home is reduced by depreciation claimed on a home office.
XXc.The sale must be reported on Form 1040, even if the entire gain is fully excludable.
6.  Which of the following statements about a reverse mortgage is not correct?
a.Interest that accrues on the loan can be deducted annually.
XXb.It is restricted to homeowners age 62 and older.
c.The law caps the fees at a maximum of $6,000.
7.  A homeowner rents out his home for a week. What can he deduct?
XXa.Usual homeowner deductions only (mortgage interest, taxes, and casualty losses)
b.Usual homeowner deductions, plus depreciation for the week
c.Usual homeowner deductions, plus advertising for the rental and maintenance related to the rental period
8.  A homeowner rents out his vacation home for three weeks and uses it for a family vacation for two months. How much can the homeowner deduct?
a.All of the rental expenses and usual homeowner deductions, without regard to rental income
XXb.All of the rental expenses, to the extent of rental income, and the usual homeowner deductions-such as mortgage interest and real estate taxes
c.Only the usual homeowner deductions and no rental-related expenses
9.   If a vacation home is rented out for 15 days or more and personal use exceeds 14 days or 10% of rental use, then there are no limitations on deducting rental expenses. True or False?
a.True
XXb.False
10.   When a home is foreclosed upon, there can never be any gain on the transaction. True or False?
a.True
XXb.False