Beaufort purchased some rental property in a bad part of town 30 years ago for $50,000, hoping it would go up in value. He rented it out for decades. About 10 years ago the neighborhood started improving, to the point that he moved into the rental property 5 years ago and made it his principal residence. 30 years after he purchased the property, he sold it for $300,000. Will he be able to exclude $250,000 from his taxable income?
a) Yes, because he lived in the house as his principal residence for five years.
b) No, because he rented the property before he moved into it.
c) Yes, because most of the appreciated value occurred during the time he lived in the home.
d) No, because the house began to appreciate in value 10 years earlier.