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Showing posts from March 5, 2008

TAX RELIEF ON THE SALE OF (SOME) VACATION HOMES

A lot of attention these days is being focused on the struggles many, many people are enduring selling real estate at a loss, whether the result of mortgage woes or declining market prices, or both. Deservedly so. This is a big problem. This is reflected in a significant number of the contracts I am working on right now; short sales, properties in foreclosure; post-foreclosure bank sales; sellers paying money at closing to cover liabilities in order to sell. I am helping clients on all sides of these types of deals. Not a happy time at all for these sellers.

But still and all, many sellers are profiting handsomely when their deals close. And when they profit, the tax man takes interest. Fortunately, the Internal Revenue Code provides two very powerful protections for sellers. And now, as of March 10, there will be a significant expansion of one, to benefit some vacation property owners.

The Section 121, Principal Residence Exclusion, shelters up to $500,000 of capital gains on a Prima…