wonder what helped drive up the housing market and deprive the treasury of now much needed taxes-maybe somebody will look into this and change to a more reasonable 5 or 7 year personal residence requirement period
how would you like to have made $3Million profit in the last 10 years without having to pay any taxes on it? Many did-and contributed to the housing bubble
Simple
http://www.bankrate.com/brm/news/real-estate/20041018a1.aspsell your home in 1997 with new tax law
What's the best tax break available to Jane and John Q. Public? If they're homeowners, it's selling their house.
Homeowners already know the many tax breaks that Uncle Sam offers, most notably mortgage interest and property tax deductions. Well, he also has good tax news for home sellers: Most of them won't owe the Internal Revenue Service a single dime.
When you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, twice that if you're married, and not owe any capital gains taxes.
..snip
Some sellers are surprised by this break, especially if they've been in their homes for a while. That's because before May 7, 1997, the only way you could avoid paying taxes on your home-sale profit was to use the money to buy another, more-expensive house within two years. Sellers age 55 or older had one other option. They could take a once-in-a-lifetime tax exemption of up to $125,000 in profits. And in all instances, there was tax paperwork (Form 2119) to fill out to show that you followed the rules.
But when the Taxpayer Relief Act of 1997 became law, the home-sale tax burden eased for millions of residential taxpayers. The rollover or once-in-a-lifetime options were replaced with the current per-sale exclusion amounts.
now rinse, wash and repeat for the next decade 1999, 2001, 2003, 2005, 2007 and you had six chances to make a total of $3 MILLION dollars tax free if you were part of a married couple, only $1.5 Million if you were single.
Funny how housing prices started to climb in 1997 as more and more people came to understand this huge tax-free money maker. Many more people started to look at houses as investment tools instead of a home. Then add in the sub-crime loans to the equation and the bubble grew even faster. I don't know why most stories on the housing bubble leave out the Capital Gains tax change.
http://www.deadlinenews.com/capgains.htmlWHEN the 105th Congress passed H.R. 2014, the federal Taxpayer Relief Act of 1997, home owners breathed a sigh of relief, but three years later the sighs more often revealed exasperation over several misunderstood provisions.
The three year old federal tax law says when you sell your home, if you qualify, you can keep, tax free, capital gains of up to $500,000 if you are married filing jointly or $250,000 for single taxpayers, or married taxpayers who file separately.
"The biggest confusion is that many people think that the $500,000 applies to everyone. It only applies to couples who file joint returns. It comes as a big shock that you only get the $250,000 exclusion if you are single or filing separately," said Leonard L. Williams a Sunnyvale, CA certified public accountant.
Under the law, to qualify for the $500,000/$250,000 exclusion, the home must have been your primary residence for at least two of the prior five years.
..snip
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
