Don't tell buyers that they can deduct property taxes and interest to get them to purchase a home. You must be certain that they have enough other deductions (e.g., combined deductions exceeding $11,400 for a married couple filing jointly in 2010) so they can take full advantage of the realty-related deductions.
A taxpayer currently may exclude up to $250,000 ($500,000 for a married couple filing jointly) of gain on the sale of a personal residence if the taxpayer owned and occupied the residence for at least two of the previous five years. If the taxpayer held the home less than two years, a prorated portion of the exclusion may apply. The number of times a homeowner may use this exclusion is unlimited, except that the exclusion can be used only once every two years. The law is advantageous to most families because it allows them to earn large profits on their residences tax free.
Information courtesy of Rowlett Real Estate School www.rowlettrealestateschool.com
P.Stone, RRES
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