The Federal Government’s policy encouraging home ownership through tax breaks has not abated. In fact, it has encouraged home ownership for the past century to an extent unparalleled in the world. Mortgage interest deductions alone amount to a national subsidy of $40 to $60 billion. Even after the Tax Reform Act of 1986, mortgage interest and property tax deductions were left untouched as virtually the only major deductions left for the average citizen. Mortgage interest deduction alone is one of the largest tax write-offs for the average homeowner.
Now, with the most recent change in the tax code, the homeowner has received another tax break and this is fantastic. There is a tax exemption of up to $500,000 (for joint filers) on the profit from the sale of your primary residence ($250,000 for single filers). All you have to do is live in the home for two years prior to selling. I tell you, we’re in a homeowner’s tax Shangri La!