Beginning in May of 1997 a new law called the Taxpayer Relief Act significantly decreased the taxes that a homeowner must pay when selling a house. This law allows an individual to protect as much as Two Hundred and Fifty Thousand Dollars from capital gains taxes. Couples selling a home may protect Five Hundred Thousand Dollars. This law applies to you if you're selling your home and you have lived in it for at least two of the last five years before the sale. This exclusion can be claimed once every two years. If you don't pass this test, which is known as the 'ownership test', you can still protect some of your sale form capital gains taxes. If you're selling because of an employment change or health reasons, you may receive a portion of the savings based on how long you've lived in the home. In addition to this law, there are many other laws that are on the books affecting various real estate matters. For information about real estate taxes particular to your state, contact a real estate lawyer in your area.
