Benefits of converting longtime home into rental

Roll eventual sale profit into investment to avoid taxes

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

Seniors are particularly careful about guarding their assets. With little monthly income, older people still living in their longtime primary residences need to make the most of an eventual home sale. Helen (last name withheld), from Gig Harbor, Wash., was concerned that she would be taxed on the entire sale of her home because she had already taken the "over 55" exclusion with her late husband on a previous home.While she would like to move to San Diego, Calif., where her daughter has built a new unit above the garage, she was leery about paying a huge tax consequence. The good news for Helen, and others like her who had already taken the "one-time" $125,000 exclusion, is that they are still eligible to take the $250,000 exclusion ($500,000 for married couples) on the sale of a primary residence. And they can do it every two years. The Taxpayer Relief Act of 1997 changed not only the $125,000 one-time home-sale exclusion for persons over 55, but also ...