Agent

Principal-residence rule puts snag in seller’s tax deduction

Can seller still qualify for $500,000 exemption?

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DEAR BOB: I've read several articles you wrote in 2001 and 2002 about the Internal Revenue Code 121 $250,000 principal residence sale tax exemption (up to $500,000 for a married couple filing jointly). Is that tax law still in effect? My husband and I spend six months each year in our Florida home and six months annually in our other home, which we recently sold. We filed a Florida homestead to save on property taxes. Our accountant said that because tax-law changes occur all the time, we should check to see if we qualify for the IRC 121 tax exemption. Since we meet the "aggregate" two-out-of-last-five-years ownership and occupancy tests for the home we sold, do we qualify for the $500,000 exemption? – Joan H. DEAR JOAN: I am shocked your accountant didn't know the answer to your first question. Internal Revenue Code 121, enacted by Congress in 1997, is alive and well. There are no proposed plans in Congress to change it. In fact, the IRS recently announced new regulations clarif...