Thumbs Up: Home Tax Twists

Physician's Money Digest, March15 2005, Volume 12, Issue 5

Almost every homeowner knowsthat interest paid on a homemortgage is tax deductible, but somedon't realize that the tax benefits ofhome ownership also extend to whenyou sell. Married couples can exemptup to $500,000 of profit on a homesale from capital gains tax (singles upto $250,000), as long as they have usedthe house as their primary residencefor at least 2 years. If you own a secondhome and sell it, you don't get the taxbreak, but there is a way around that.Sell your primary home, claim the taxexemption, and then move into yoursecond home and live in it for at least2 years. Since there's no limit on howmany times you can claim the capitalgains tax exemption, you can use itagain when you sell the second home.