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The Once-in-a-Lifetime Rule

Often GreatWest GMAC Real Estate professionals will be asked by home buyers if home sellers age 55 or older were still allowed a once-in-a-lifetime tax exemption of up to $125,000 in sale profit. That is no longer true. On May 7, 1997, the tax law on home sales changed.

If you live or dwell in the house for two of the five years before you sell, the IRS won't collect tax on sale profit of up to $250,000 if you're single or $500,000 if you and your spouse file a joint return.
Currently the law rewards people who sell frequently. In this current market, homeowners who sell every couple of years can benefit.

Still, remember to always keep track of what you paid and what improvements you make. The improvements add to your home's basis, which you subtract from the sale price to determine your profit and whether any of it is taxable.

For important tax questions it is advisable to seek the advice of a tax professional or CPA.

Posted by Myrl Jeffcoat on 08/02/2008 07:54 AM

Comments (4)

sacramento real estate, gold river, folsom, rancho cordova, fair oaks, citrus heights, myrl jeffcoat

4 Comments on The Once-in-a-Lifetime Rule

Wow. You are posting some great information. I really like what you are doing. You must be ranked highly in ActiveRain? It sounds like GreatWest agents really stay up with the current laws and regulations.

08/02/2008 05:31 PM

by GreatWest GMAC Real Estate

Sellers that have had their property for a long time could be subject to this tax. Good post.

08/03/2008 12:26 AM

by Robert Machado, CPM MPM Sacramento Area Property Manager and Property Management (HomePointe Property Management, CRMC)

Myrl,

I just noticed that you have made over 100 posts. Congratulations! As for what you state, very true, and the key word here is "profit."

Steve

08/03/2008 10:59 AM

by Steve Hoffacker - Real Estate Sales & Marketing Consulting and Strategies (Hoffacker Associates LLC)

Brodie @ GreatWest - I'm glad you are happy with the information. I'm fortunate to have the company as a valuable resource to tap for vital information at their disposal as a resource. I'm also grateful for the ActiveRain community bloggers, who bring to the table a great deal of information, that we are all collectively able to use, synthesize, and work with, for the betterment of our clientele.

Robert - So true, especially if they have made significant improvement to the property. It's also very important to keep records and receipts for those improvements. And it's always a good idea to consult with a tax professional or CPA

Steve - Hmmm, over 100 posts, I hadn't even't realized it! It goes to prove time flies when you're having fun.

08/03/2008 12:54 PM

by Myrl Jeffcoat (GreatWest GMAC Real Estate)

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