Home Owners Taxes and Capital Gains
If you are a home owner expecting to have a capital gain on the sale of your home, Uncle Sam has given you a big present. The 1997 federal budget eliminated the traditional system of rollover deferrals of tax liability on home sale profits. The new rules are effective for principal residences sold after May 6, 1997.
If you are a married home-seller filing jointly, you will enjoy up to $500,000 in home sale gains tax-free, provided you have occupied the property as your principal residence during two of the last five years. Taxpayers who file singly (even if they are married) get a $250,000 capital gains exclusion. Home-sellers are eligible to exclude capital gains on the sale of a home as often as once every two years.
The new law allows capital gain exclusions whether you "buy up" to a more expensive home or "buy down" to a less expensive one. If you have a gain above the limit, it will be taxed at the new 20% capital gains rate, down from the current 28% rate. Beginning in 2001, the capital gains rate drops to 18% for taxable gains on a principal residence that you have occupied for at least five years. Consult your tax advisor for your particular circumstance.
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Seger Realty, Inc.
1071 Jamestown Blvd.
Watkinsville, GA 30677