Without Capital Gains Tax, Second Homes More Likely

Thanks to a 1997 change in the federal tax code, more homeowners are retaining profits from sales, with the opportunity to buy two homes as a result.

1 minute read

April 4, 2006, 5:00 AM PDT

By David Gest


"If you are thinking about buying a second home this spring -- or you bought one in the past couple of years -- you are part of a major transformation in the real estate market.

The number of second homes purchased annually in the United States doubled from 2000 to 2004, according to new research. The boom is being driven in part by demographics -- mainly a flood of equity-laden baby boomers -- and in part by a largely unexpected effect of tax-law changes in the late 1990s."

"When Congress amended the federal tax code in 1997 to permit up to $500,000 (for married couples) or $250,000 (for singles) of gain on the sale of a primary home to be spared from taxation, 'homeowners did not have to buy expensive [replacement] homes anymore...'"

Saturday, April 1, 2006 in The Washington Post

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