A previously excellent tax planning device for Home Sale Exclusion is no longer available!

If you had a rental with large capital gain potential, you could move back into the rental for at least two years before its sale and exclude the gain over $250K or $500K depending on filing status.  If you lived in your residence for over two out of five years of ownership and later on rented it out before selling it, you could still exclude any gain over $250K or $500K.

Effective for sale of property after Dec. 31, 2008 taxpayers can only exclude gain based on how much time the house was a qualified principal residence.  For the time it was not a principal residence, taxpayers must include the gain from the home sale with no exclusions!  Note:  there are exceptions to the time requirements.

If you file your taxes without enough deductions for using an amount over the standard deduction (Schedule A), don’t forget to take up to $1,000 off for Property taxes.  This is for 2008 ONLY.