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Condos & Tax Effects
This link will enable you to research the Internal Revenue Service Code for issues related to tax effects of purchasing, selling, and residing in condominiums and townhouses.
Although this link will provide you with the boldface law, check with your tax advisor regarding any nuances, case law, or updates not covered here. Although this link is believed accurate, no guarantees of accuracy are made herein. Check with your tax advisor.
Simply click the link below to search the U.S. Internal Revenue Code:
I have also included Frequently Asked Questions:
Reduced Capital Gains Tax Rates:
The Taxpayer Relief Act of 1997, effective retroactively to May 7, 1997, provides for a capital gains rate of 20% (reduced from 28%) for taxpayers in upper brackets and 10% (down from 15%) for those in lower brackets. (Taxpayers in upper brackets are those with gross incomes upwards of $150,000 if filing jointly and upwards of $75,000 for those filing singly.) Effective July 29, 1997, assets must be held at least 18 months to qualify for the new rates.
While the reduced capital gains rates also apply to investment properties, gains due to recapture of depreciation deductions are taxable at 25%. The tax-deferred exchange rules under IRC Sec. 1031 remain unchanged.
Beginning in the year 2001, home buyers who occupy their homes for more than five years may qualify for the even lower capital gains rate of 18%.
The above information was obtained from Realty Bluebook, Edition 32, and is believed accurate, but not guaranteed.
Capital Gains Homeowners Exclusion:
In the sale of a principal residence where the owner has resided for two of the last five years, the Taxpayer Relief Act of 1997 provides for a capital gains tax exclusion of $500,000 for taxpayers filing jointly and $250,000 for those filing singly.
Taxpayers may take advantage of this capital gains tax exclusion every two years for an unlimited number of transactions. The measure eliminates existing rollover provisions and the one-time exclusion for those 55 years old or older.
This information was obtained from Realty Bluebook, Edition 32 and is believed accurate, but not guaranteed. Check with your tax advisor.
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