Capital Gains

2009 CHANGES TO CAPITAL GAINS EXCLUSION

Starting on January 1, 2009 there is a change to the exclusion of a capital gains tax on vacation homes. During the summer of 2008, the U.S. Congress closed an important loophole which gave vacation homeowners a sizable tax break.

Until now, vacation home owners could move to their retreat, live in it for two years, then sell it and take full advantage of the capital gains exclusion of up to $500,000 per couple, $250,000 for singles, that applies to primary homes.

Under the new rules, that exclusion will be prorated by the amount of time the owner actually uses the home as a primary residence. This is an important change and one we urge you to discuss with your accountant or tax attorney.