Big Tax Bill for Downsizers
Columnist Bob Bruss warns readers they'll have to pay hefty capital gains when downsizing to what might have been a second home or even a smaller new home. "The old 'rollover residence replacement rule' of Internal Revenue Code 1034 no longer applies to home sellers buying replacement homes. That tax break was repealed in 1997. Uncle Sam presumes the $500,000 principal residence sale capital gains exemption for a married couple (up to $250,000 for a single home seller) is enough....At the current 15 percent federal tax rate plus state tax" downsizers still make a "big profit on their home sale," he notes.