Alice, a single woman, buys her home for $200,000 on January 1, 2016. She proceeds to...

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Alice, a single woman, buys her home for $200,000 on January 1, 2016. She proceeds to use that home as her principal residence for the next three years. On January 1, 2019, she coverts the home into a 100% rental and rents it out for the year in which it was always occupied by the tenant, On December 31, 2019, she sells the home for $240,000. Disregard selling costs, improvement and repair costs and any other expenses associated with the home including depreciation. How much capital gain will Alice have to recognize (pay taxes on)? Alice, a single woman, buys her home for $200,000 on January 1, 2016. She proceeds to use that home as her principal residence for the next three years. On January 1, 2019, she coverts the home into a 100% rental and rents it out for the year in which it was always occupied by the tenant, On December 31, 2019, she sells the home for $240,000. Disregard selling costs, improvement and repair costs and any other expenses associated with the home including depreciation. How much capital gain will Alice have to recognize (pay taxes on)?

Answer rating: 100% (QA)

To calculate the capital gain that Alice must recognize we need to establish the cost basis of the p... View the full answer