|
|
Homeowners are winners under the Taxpayer Relief Act of 1997.
Under the new law, up to $250,000 ($500,000 for a married couple
filing a joint return) of gain realized on the sale or exchange
of a principal residence is not taxable – not just deferred.
In addition, the new law reduced the capital gains tax rate. Any
gain from your home sale in excess of $250,000/$500,000 is taxed
at the new lower rate.
Homeowners qualify for this tax exclusion if two requirements
are met:
- The home must be used as a principal residence for two of
the preceding five years. This law does not apply to
vacation or second-home properties. There are some
exceptions for those who cannot satisfy the two-year use
requirement.
- No more than one sale or exchange can take place every two
years.
If you are selling your home, you should contact a tax
advisor for details on how this new law applies to your sale.
|
