New rules on exclusion of gains from the sale of a personal residence
It allows married taxpayers filing a joint return to exclude up to $500,000 of gain on the sale of their primary residence. Single taxpayers are allowed to exclude up to $250,000 of gain. In order to qualify for this exclusion, the homeowner must have lived in and used the home as their principle residence two out of the last five years. A homeowner is allowed to take this exclusion once every two years. There is also no limit as to the number of times this exclusion may be taken.
Penalty free withdrawals for education and starter homes
The 10 percent additional tax on early withdrawals from IRA and 401K plans does not apply to withdrawals (after 1997) that are used to pay qualified higher education expenses, or to pay a first time home buyer's costs of purchasing a principal residence.
To Learn More...
The Taxpayer Relief Act of 1997 contains several key provisions which you should be aware of. Your personal tax advisor is the best resource for information. We suggest that you contact a professional to learn exactly how this legislation impacts you.
The National Association of Realtors, the Pennsylvania Association of Realtors and the Pike/Wayne Association of Realtors worked very diligently for the passage of these favorable real estate tax law provisions. It's up to you to take advantage of them! Contact us today for more information.