The 1997 tax bill is now in effect. All home sales after May 7, 1997 are affected by it. If you sold your home before May 7th the old rules applied ( $125,000 over 55 one-time exclusion, role over of capital gains if a new residence costs more and is purchased within two years of the sale of the old residence,etc.).

The New Rules: (this is just meant as an general information piece, please contact your tax advisor for specific provisions of the 1997 Tax Law and how they affect you) Basically, if you live in the home, as your principal residence for two out of five years, you can exclude $250,000 if you are single or $500,000 if you are married on any gain from the sale of your principal residence.

How often can you do this?: Literally every two years as long as you meet the requirements set forth above.

What if the gain is over $250,000 for single or $500,000 for married couples?: Any gains above this will be taxed at the new 20% capital gains rate, down from 28%. After 2001 if you occupy your home for five years, this rate drops to 18%.

Individual Retirement Account Downpayment Withdrawals:
If you are a first-time home buyer, you may withdraw up to $10,000 from your IRA to use as a downpayment on your new home. There will be no penalty (a 10% federal penalty on top of regular income tax was charged under the old law). The first-time homebuyer, their parents, or grandparents may withdraw this amount for the downpayment.

Get an Alliance agent to help you with the sell or purchase of your home More...