Year of Award
Master of Science in Taxation (MST)
College of Business & Professional Studies
property, gain, SEC
This paper is geared to help the person who is selling a personal residence understand the tax effects of that sale by providing the basic rules that cover most situations. It explains the law, how it works, pointing out problems that may occur and explaining how to avoid them. It gives planning techniques and analyzes areas of the law that are too harsh or do not treat taxpayers equally, and offers suggested changes.
What are the rules that make selling a residence an easy tax-free experience? What about those taxpayers who discover extenuating circumstances that have made selling a residence a nightmare? What are the tax traps in selling a residence and what planning can be done to avoid them? Is the tax law fair and does it treat everyone equally?
When selling a home, all too often the tax consequences are not considered until filing the tax return the following spring. It is discouraging to think one has completed a tax-free transaction, only to find because of one small detail, thousands of dollars in taxes are now due.
Congress has attempted to help many taxpayers postpone and eventually eliminate paying tax on the sale of a home by putting in the law a mandatory rollover provision and a $125,000 gain exclusion for those over age 55.
Selling a personal residence can be a favorable experience taxwise when the rules and how to apply them to individual circumstances are understood.
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Wheeler, L Clarice, "How to Avoid Paying Tax on the Sale of a Personal Residence" (1993). Theses, Dissertations, and Capstone Projects. 243.
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