Question

1) Generally, the tax law provides more incentives for renters than homeowners.

True or False

2) A personal residence is a capital asset.

True or False

3) A taxpayer can only exclude gain on the sale of their current personal residence (the residence the taxpayer is living in at the time of the sale).

True or False

4) As a general rule, at most, a taxpayer is allowed to exclude gain on the sale of a principal residence once every two years.

True or False

5) The maximum deductible amount of qualified residence interest is indexed for inflation (it increases each year).

True or False

6) Interest paid on a home equity loan used to purchase a car is not deductible.

True or False

7) Taxpayers with a qualifying home office can compute their home office expense using the actual expense method or the simplified method. Taxpayers can choose to use one method for one year and the other method for the next.

True or False

Answer 1

1) Generally, the tax law provides more incentives for renters than homeowners.             False

2) A personal residence is a capital asset. True

3) A taxpayer can only exclude gain on the sale of their current personal residence (the residence the taxpayer is living in at the time of the sale). False

4) As a general rule, at most, a taxpayer is allowed to exclude gain on the sale of a principal residence once every two years. True

5) The maximum deductible amount of qualified residence interest is indexed for inflation (it increases each year). False

6) Interest paid on a home equity loan used to purchase a car is not deductible.                                  False

7) Taxpayers with a qualifying home office can compute their home office expense using the actual expense method or the simplified method. Taxpayers can choose to use one method for one year and the other method for the next. True