Know the tax rules on sale of exchanged property

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CORRECTION: This column has been updated with a correction. The Housing and Economic Recovery Act of 2008 amended Section 121 of the Internal Revenue Code. That section no longer permits homeowners to take the full tax-free exclusion on the sale of real property that was held and used as their primary residence if there was any nonqualified (rental) use of the real property prior to it being held and used as their primary residence.The lackluster housing market has many investors looking for bargain properties, sometimes in bunches. Buyers are getting more creative about funding their purchases, rethinking the role of real estate not only for their portfolios but also for their residences.In a recent example, an older couple sold their home and purchased two Arizona golf-course condominiums with the proceeds -- one for their primary residence and another as a rental -- and still put some money in their pocket. What made the deal interesting was that they had purchased the origina...