Significant tax reform legislation was signed into law with the Taxpayer Relief Act of 1997. This legislation replaced both the one-time $125,000 tax-free exclusion for homeowners aged 55 and older, and the "rollover" deferment of capital gains tax requiring the purchase of a replacement home of higher or equal cost within two years of the sale of your principal residence.

With this change, a married couple filing their taxes jointly pays capital gains taxes only on that portion of home sales profits that exceeds $500,000. Single taxpayers, heads of households, and married persons filing separately may exclude up to $250,000. The exclusion is available for all sales of homes that occurred on or after May 6, 1997. Homeowners can use this tax-free provision every two years.

You are allowed to keep these tax-free profits only if you have owned and used the home as your principal residence for two out of the five years prior to the sale of the property. Although the regulations do not require continuous occupancy, the IRS specifies that your principal residence must be the home you use for the majority of time during the year. Consult your tax advisor about your personal circumstance.

	See All Tips In The "Tax Considerations" Category >
	See Complete Library Of Hundreds Of Tips In 30+ Categories >

Jim Moore Team
RE/MAX
1111 Breuckman Drive
Crown Point, IN 46307
219-662-9533
Fax: 219-662-9534
JimMooreTeam@NUMBER1EXPERT.com

www.JMExpert.com is brought to you by The Jim Moore Group
NUMBER1EXPERT in real estate for Crown Point, Schereville and St. John, Indiana

Read The Jim Moore Group's Privacy Guarantee, Terms of Service, and Free & Without Obligation Pledge