Taxpayers who sell their principal residences
and move into vacation homes that they previously purchased may be able to defer the gain on the sale of the principal residence
There were some significant 2005 developments involving gain on principal residences
. Since 1997, individuals selling their principal residence
have been able to exclude $250,000 of gain ($500,000 on a joint return) when they used the residence as their principal residence
for at least two of the preceding five years.
When one or both individuals who decide to marry already own principal residences
, they need to consider the effects the gain deferral and/or exclusion rules will have on the sale of one or both of these residences.
* The AJCA also restricts SUV expensing, charitable contributions of vehicles and the gain exclusion for principal residences
acquired in like-kind exchanges.
They may take a Sec, 121 exclusion related to their separately owned principal residences
up to $250,000 each; see Regs.
The Revenue Reconciliation Act of 1993 sought to reduce the tax liability of individuals who receive insurance proceeds for homes and contents destroyed in presidentially declared disaster areas by expanding the involuntary conversion treatment to include principal residences
. Internal Revenue Code section 1033(h), retroactive to September 1, 1991, says any insurance received for a damaged house or its scheduled personal property (separately insured) will be treated as a common pool of funds.
The amended section provides a great opportunity for taxpayers willing to pack and move when they have a realized gain on the sale of their principal residences
, but not more often than once every two years.
The TRA '97 modified the income tax treatment of gains from the sales of principal residences
. Under the new law, taxpayers are generally able to exclude up to $250,000 of gain ($500,000 if married filing jointly) from the sale or exchange of a principal residence
Two major tax breaks are available for taxpayers who sell their principal residences
* When taxpayers' principal residences
are destroyed or lost through condemnation, under Sec.
Ms Ndlovu said during the supplementary exercise, when interacting with voters, they had gathered that members of the public were confused as to where they should register because of confusion of boundaries of their principal residences
Rentals in principal residences
- for both owners and renters - will be able to be legally rented for periods of less than 30 days at a time.