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.
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