| Effective on or after May 7, 1997, the sale of your personal
residence is no longer taxed if the gain is under $500,000 for joint filers;
$250,000 if you file singly. Excess
taxed at capital gains rate. No age limits. No restrictions if you have already use a one
time exemption.
Home must be used as principal residence
for 2 of last 5 years. Does not apply to vacation homes or second home properties.
How often can sellers make use of new
rules? As often as once every two years.
If a home has been used as a principal
residence and as a rental property during the ownership any depreciation taken after May
7, 1997 must be recognized on sale.
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Does this mean
you can move into a rental house which you have fully depreciated, live there there 2
years and have NO TAX? Bruss
says YES. |
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| Investment real
estate: Effective May 7, 1997, capital gains rate taxed at a 20%. Recapture of
depreciated amounts at 25%. This is
down from 28%. Thank you National Association of Realtors to get this provision passed. All property owners should be on
bended knee.
Effective for sales or exchanges after
July 28, 1997, the holding period increases from one year to 18 months. |
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Read the
law. Other elements of H.R. 2014: Effective January 1, 2006 capital gains rate for assets held 5
years or more the capital gains tax rate reduces to 18% if taxpayer satisfies complex
rules (8% in 15% bracket).
Estate Tax Relief: The unified estate and
gift tax credit of $600,000 was increased to $1,000,000. See estate tax phase-in schedule.
Health Insurance Premiums for
self-employed are now deductible. See
insurance phase in schedule.
First time buyers can now tap IRA
accounts for down payments up to $10,000; effective 1/1/98. IRA withdrawals from relatives
are eligible.
Home office deduction liberalization
effective 1/1/1999.
No change to tax-free exchange. Starker
type exchange rules intact.
| More New Tax
Law articles: |
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