Main Home Exclusion limited for Nonqualfied Use
The Housing Act of 2008 removes one of the best tax loopholes we've had for years. Under the Act, for sales after 12/31/08, the gain from the sale or exchange of a principal residence will no longer be excluded from gross income for periods that the home was not used as the principal redience (Nonqualified Use).

The amount of gain allocated to periods of nonqulified use is the amount of gain multiplied by a fraction the numerator of which is the aggregate periods of nonqualified use during the period the property was owned by the taxpayer and the denominator of which is the period the taxpayer owned the property.

However, the nonqualified use does not include any portion of the five-year qualifying period which is after the last date the property is used as the principal residence of the taxpayer or spouse (regardless of use during that period).

09/08/2009 17:29:44
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