Sale of Personal Residences

Sales of Personal Residences

Since May 6, 1997, there are totally new rules for the sale of a personal primary residence for Income Tax purposes.

The old rule allowed one to defer the gain from the sale of a primary residence as long as a new one (costing the same or more than the old one’s sale price) was bought within two years before or after the sale of the old one. There also had been a $125,000 exclusion available for those over age 55. Both of those rules were repealed for sales after May 6, 1997.

The new provision allows married couples to exclude up to $500,000 in profits from the sale of their personal primary residences. (The exclusion is only $250,000 for single people) The home must have been their principle residence for at least 2 of the prior 5 years. While this has been hailed as a break-through for taxpayers, it will help some and hurt others because the deferral-by-replacement provision has been eliminated…

For further information consult with your accountant.