Agent

Previous home sale affects real estate taxes

IRC 121 explained

DEAR BOB: My husband owned his home when we met and later married. We sold that home in 1993 and "rolled over" the profit into our current home. We are now thinking of selling our current home. How does the new law you often discuss apply to us? – Christine M. DEAR CHRISTINE: Thank you for bringing up an often-overlooked aspect of wonderful Internal Revenue Code 121. Purchase Bob Bruss reports online. As you probably know, IRC 121 allows up to $250,000 (up to $500,000 for a qualified married couple filing jointly) tax-free, principal-residence sale profits. To qualify, you must own and occupy your principal residence an "aggregate" two of the five years before its sale. Congress enacted IRC 121 in 1997. However, under the old, now-revoked IRC 1034, your husband deferred capital-gain tax on the sale of his previous principal residence by purchasing a replacement principal residence of equal or greater cost. Amazingly, many people think that old rollover tax law is still in ef...

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