The Taxpayer Relief Act of 1997 created a significant tax benefit for homeowners with capital gains from the sale of their homes. To qualify the sold home must have been the owners primary residence for at least two of the prior five years. For sales that qualify, homeowners can exclude up to $500,000 in capital gains for couples married and filing jointly, up to $250,000 for single taxpayers. This is a major tax benefit. The benefit is also “reusable,” in that someone could buy a new home and sell again after two years of primary residency repeatedly and exclude the above noted capital gains each time.
Sellers in Cardiff, Encinitas, Carlsbad, Oceanside, and San Marcos should consider this large tax advantage in calculating the financial benefit of selling.