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carole sabatelli

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The Tax Man Goeth

Until the "Taxpayer Relief Act of 1997, if you sold your home for a profit, you might have had a visit from the IRS "Tax Man." No more - today's rules are different!

Prior to 1997, if you made a profit on your home sale, you either paid tax on the gain at ordinary tax rates, or had to purchase another home of equal or greater value within 24 months. If you bought a home in the 70's for $35,000, then sold it in 1996 for $140,000, you'd pay tax on the gain of $105,000 - as much as $29,400 - not a happy thought.


Today, the "Tax Man" is usually out of the picture. The "Taxpayer Relief Act" states than on home sales there will be no capital gains tax on up to $250,000 of profit for single taxpayers or $500,000 for married filing jointly. To qualify for the exclusion, sellers must have owned and used the home as their principal residence for at least two of the past five years. The other qualification is that sellers must not have used this exclusion for at least two years.

The new tax law on homes is of special interest to property owners who have lived in their home for many years. It also benefits those who live in areas where rapid price appreciation has occurred.



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