Tax Benefits of Home Ownership 
The tax laws beginning in 1998 and in some cases a little
earlier have changed in regards to homeownership and the previous requirement to
reinvest profits from the sale of a principal residence.
The new law allows for married taxpayers filing a joint return
to exclude up to $500,000 of gain on the sale of their principal
residence. Single taxpayers can exclude up to $250,000 of gain.
To Qualify for the exclusion, homeowners must have lived in
and used the home as their primary residence for TWO OUT OF THE PRECEDING
FIVE YEARS. Homeowners are allowed to take the exclusion
ONCE EVERY TWO YEARS.
PLUS,
HOMEOWNERS MAY TAKE THE EXCLUSION AS MANY TIMES AS THEY LIKE,
There is no cap on how much total gain they may exclude in their lifetimes.
This is a significant change in the tax law.
MORE BENEFITS:
TRANSFEREES
Homeowners going to a LESS expensive real estate market will now be able to
purchase a LESS expensive home without worrying about the rollover rules,
exclude the gain, and take the cash and do whatever they want with it.
EMPTY NESTERS & RETIREES
Homeowners wishing to 'downsize' will be able to sell their current home,
take the equity, claim the exclusion, buy a condominium or smaller home and use
the leftover proceeds for a retirement investment.
SINGLES 55 Or OLDER
Can stop worrying whether a prospective spouse has already taken their
exclusion - the new law allows new exclusions even if the old exclusion was
used.
There are many changes that could significantly affect 'do it
yourself' fixer-uppers and owners of second homes or rental properties.
CAUTION: Before you make any
financial decisions based on tax laws, consult an expert on taxes as they relate
to real estate.
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