Tax Reform - What Is The Status Of The 'Taxpayer Relief Act Of 1997'?
Under the Taxpayer Relief Act of 1997, you can sell your home and pay no capital gains tax. This applies to up to $250,000 for an individual home owner and up to $500,000 for joint return taxpayers. To qualify, the home must be your primary resident for two of the last five years.
This is not a one time benefit. You can take advantage of this as long as the home is your primary residence for two of the last five years. Your home is thus the only asset I am aware of that is not subject to paying capital gains taxes.
Even if you convert a rental property to your primary residence for two of the last five years, you qualify for this benefit. In other words, the two years you live in a property do not have to be consecutive. There is no limit to the number of times you qualify.
One thing I don't know is whether or not this law is repealed as part of tax reform? It could be an unintended consequent of the tax reform plans being considered today.
Please contact your Congressman if you have any questions. All I know, is that I have not seen this law discussed during the tax reform debates currently underway.