It also eliminates the need to purchase a home at greater value to defer taxes. But it does open up opportunities for real estate investment professionals. Owners of multiple properties can avoid tax on gains simply by living in each home for two years. An investor could purchase run down property, fix it up, and exclude any gain at sale simply by living in the home for two years. People who can afford to move from house to house will have an opportunity at the biggest benefit.
Many individuals now have access to a new source of funds for purchase of a first-time home.
Many individuals who have considered buying versus renting, including the ensuing tax advantages, but did not have the down-payment may now be able to purchase a first time home. Keep this in mind when planning your estate. Many investors held onto appreciated stocks in anticipation of the lowering in the long-term capital gains rate. Also, keep in mind that many tax law provisions, including those changed for 1997 and 1998, are tied to Adjusted Gross Income. Overall tax planning can help you determine any advantages or disadvantages to selling or holding investments in 1997.