In 2000,francine purchased a cottage in the country for $110,000;she sold it for $172,000 in january 2012.During her period of ownership,francine spent three weeks at the cottage during the summer and approximately two weekends each month.
Francine claimed the principal residence exemption from 2003 to 2008{inclusive} on her house in the city which she sold when she moved into the apartment rented by her new husband .In 2012,francine sold the cottage as a result of her recent marital breakdown.How much of her capital gain on the cottage can she exempt using the principal residence exemption?
A,$0
B,$28,615
C,$38,154
D,$46,500
the correct option to this question is option B $28,615. She cannot exempt her capital gain on the cottage using principal residence exemption.
the formula for computation of exemption is -
= ( 1 + # number of years exempt claimed / number of years house owned ) * CAPITAL GAIN
= (1 + 5 / 13) * $(172,000 - 110,000)
= 6/13 * 62,000
= $28,615
In 2000,francine purchased a cottage in the country for $110,000;she sold it for $172,000 in january...
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