Homeowners with Appreciated Principal Residences Can Avoid Tax on Gains

question 179

True/False

Homeowners with appreciated principal residences can avoid tax on gains of up to $500,000 if married and filing jointly and up to $250,000 if single.The home must have been owned and used as the taxpayer's private residence for two out of the last five years prior to the date of sale.

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Definitions:

MPS

The marginal propensity to save, which is the proportion of an increase in income that is saved rather than spent on consumption.

Disposable Income

Funds at households' discretion for savings and spending pursuits after the deduction of income taxes.

Autonomous Consumption

The minimum level of consumption that would still occur even if a consumer had no income, based on basic needs and obligations.

MPS

Marginal Propensity to Save, which is the fraction of an increase in income that is not spent on an increase in consumption.