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IRS allows reduced home sale exclusion
A married couple can exclude up to $500,000 of gain from the sale of a principal residence. To qualify for the full exclusion, both spouses must use the house for two of the preceding five years, and one spouse must own the house during that period. A single individual can exclude up to $250,000 of gain. You’re entitled to a reduced exclusion, if the reason you didn’t satisfy the two-year ownership and use requirement is due to a change in employment, health or other unforeseen circumstances.
What records can be disposed of after filing?
Proceed with caution before you start clearing out old records. In a tax dispute, if the IRS takes you to court, the burden of proof is on them. However, if you fail to provide good records, the burden shifts back to you. Here are some guidelines from the IRS:
A capital gains tax holiday for some taxpayers
Beginning in 2008, certain taxpayers will have a window of opportunity in which to avoid paying tax on long-term capital gains. Thanks to earlier legislation that was extended by the Tax Increase Prevention and Reconciliation Act of 2005, individuals in the 10 and 15 percent tax brackets will qualify to pay 0 percent tax on their adjusted net capital gains (long-term capital gains minus short-term capital losses – subject to some exclusions).
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