Home sellers keep profits, avoid taxes

Part 4: Tax advice for homeowners

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

(This is Part 4 of a five-part series. Read Part 1, "IRS debunks common tax myths"; Part 2, "Homeowners get good tax news for 2007"; Part 3, "How to deduct mortgage interest, points on taxes"; and Part 5, "Understanding Starker exchange rules.") "The taxpayer: that's someone who works for the federal government but doesn't have to take a civil service examination." --Ronald Reagan Q: How can I make a profit of $500,000 and not have to pay a penny in capital gains tax? A: Buy a house with your spouse, live in it for at least two years, and file a joint return. Of course, the house has to increase significantly in value. This is perhaps the most significant tax benefit currently available for homeowners. With the enactment of the Taxpayer Relief Act of l997, signed by President Clinton on Aug. 5, 2007, the two old tax rules relating to home sales -- the "roll-over" and the "once in a lifetime" -- were abolish...