Under the Taxpayer Relief Act of 1997, how often can homeowners take the capital gains exemption?

Under the Taxpayer Relief Act of 1997, how often can homeowners take the capital gains exemption?

• A. Every year
• B. Every two years
• C. Every five years
• D. Only once in a lifetime

Answer: (B)

Under the Taxpayer Relief Act of 1997, homeowners can exclude from capital gains tax a portion of the gain when selling a principal residence, provided they meet ownership and use requirements. They can exclude up to 250,000 dollars of gain if single, or 500,000 dollars if married filing jointly. The key point about how often this exclusion can be used is that it may be claimed once every two years. In other words, you must wait at least two years between qualifying home sales to take the exclusion again. Remember, you must also have owned and lived in the home as your principal residence for at least two of the five years preceding the sale.

Under the Taxpayer Relief Act of 1997, homeowners can exclude from capital gains tax a portion of the gain when selling a principal residence, provided they meet ownership and use requirements. They can exclude up to 250,000 dollars of gain if single, or 500,000 dollars if married filing jointly. The key point about how often this exclusion can be used is that it may be claimed once every two years. In other words, you must wait at least two years between qualifying home sales to take the exclusion again. Remember, you must also have owned and lived in the home as your principal residence for at least two of the five years preceding the sale.