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Article: New treatment for second-home proceeds: partial gain from sale of principal residence.(from The Tax Adviser)
- Article from:
- Journal of Accountancy
- Article date:
- December 1, 2008
- Author:
CopyrightCOPYRIGHT 2008 American Institute of CPA's. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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The 2008 Housing and Economic Recovery Act, enacted in late July, changes the rules for the partial exclusion of gain from the sale of a residence. For sales after Dec. 31, 2008, the IRC [section] 121 exclusion of gain will not apply to any gain allocated to a period of "nonqualified use." Prior to this, taxpayers simply had to meet the two-year ownership and use tests to qualify for the partial exclusion.
Under the new rules, taxpayers will have to determine the amount of gain (if any) allocable to periods of nonqualified use. Gain will be allocated to periods of nonqualified use based on the ratio that aggregate periods of nonqualified use bear to the period ...