Reminder

As we get nearer tax time a reminder to exclude any gain on primary residence sold in 06 if primary res for past 2 years. $250K filing single, twice that filing jointly. This can be huge!

Explains the law and a few exceptions. I was shocked at MHM and MOM at the folks that were not aware that this law exists and can be used every 2 years with few exceptions.

In broad strokes a person (or family) can exclude up to 500K from a sale if the home was a primary residence 2 of the last five years. The last one I did I forget exact numbers but i excluded 140K plus in gain. I held the home 2 years and a few days prior to sale. I have moved every 2 years since.

Obviously this works best in an appreciating market, buy a loss can also be deducted as an active loss. WOW! this is one of the best things our gov has done for us. For me to put 70K in my pocket each year, I need to gross over 110K…and that is not figuring both sides of social security (I am a dealer).

What amazes me is one of my customers sold a home they were in 4 years did a cap gain on over 78K, sent this in with 2005 taxes and the IRS cashed their check!! There response at my look of horror? You only get to exclude gain one time in your life and we did that in 96!! They went to my own

accountant and are filing an amended return for 05.

99% of the folks on this forum know of this law…this is for the 1% that don’t! Happy investing all.

Greg

Forget the “But a loss can also be deducted as an active loss”. That is very wrong. A loss can NOT be deducted. Sheesh, i no sooner hit enter on previous post and my phone rings…LOL. I got the entire IRS Publicvation read to me and as extra punishment I have to read the entire thing by Monday! i’m sure I’ll be tested…LOL

Greg

A question for you.

I think that I read somewhere (possibly in Bob Bruss’s column) that there was no fixed limit on the deduction as long as it didn’t exceed $250k per owner living in the house and on the deed, for the period prescribed in IRC sec. 121.

It seems that (for instance) four individuals (can but don’t have to be related), in residence, and on title etc., could deduct 1 million between them.

Have you heard anything like this?

Sorry I missed you when you were in San Diego.

Regards, doc

my accountant said only 500K can deducted by a couple married filing jointly. She posted a RFI (request for information) to the IRS and will let me know if your scenario is valid…

Greg