Posted by: terryorealtor | September 1, 2008

Federal Tax Change on Sale of Residence…IMPORTANT

Housing Assistance Tax of 2008….

“The amount of profits from the sale of a house that can be excluded will now be based on the percentage of time when the house was used as a primary residence by the taxpayer. ”
This can have significant effects upon profit and tax consequences. PLEASE see your CPA or Real Estate Tax Attorney for detailed information and how this could affect you now or in the future if you sell your home. I am not an attorney or CPA but this appears to be something NOT to be ignored up front.
It appears the amount of gain that will qualify for the exclusion is limited based on the amount of time that the house is actually used as a primary residence. If the house is used other than as a primary residence (such as rental property, or a vacation or second home), capital gains must be allocated between qualifying and non-qualifying use.
This is to take effect on January 1, 2009

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