On June 1st, 2013, Hugh and Jane, both age 45, moved into a new house with a purchase price of $180,000. They sold their previous home in January 2013.Their previous home sold for $205,000. They have lived in that home for 8 years. How much gain, if any, should they recognize for tax purposes as a result of the house sale?

1) 0

2) 45,000

3) 70,000