The Real Estate Encyclopedia
What Is The Taxpayer Relief Act Of 1997?
Category - Mortgage Questions - Tax Information FAQ's

The Taxpayer Relief Act of 1997 provides tax relief for persons selling their personal property or investment property.  The maximum capital gains tax rate was dropped form 28 percent to 20 percent (15 percent to 10 percent for those in lower income tax brackets.)


For assets sold July 29th, 1997 or later, the lower rate will apply only if the assets have been held more than 18 months. Depreciated real property is subject to special recapture provisions.


This tax law exempts profits on the sale of a personal residence of up to $500,000 for married couples filing jointly and $250,000 for singles. Sellers must have owned and used the home as their principal residence for at least two of the last five years before the sale. Effective for sales after May 6, 1997, this new provision replaces the prior rollover provision on home sales and the $125,000 exclusion of gain for those 55 and over. There was no change in the rule that prohibits taxpayers from deducting losses on home sales.


If the profits from the home sale exceed the limit, the difference is taxable at 20 percent for higher income tax brackets and 10 to15 percent for those in lower brackets. 

Mortgage Questions - Tax Information FAQ's
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