Prior to the Taxpayer Relief Act of 1997, taxpay – ers could defer a gain on the sale of a…

Prior to the Taxpayer Relief Act of 1997, taxpay – ers could defer a gain on the sale of a principal residence sold before May 7, 1997, if they purchased and occupied a new principal residence with in two years before or after the sale and the cost of the new residence was at least equa l to the adjusted sales price of the old residence. Some taxpayers who were at least 55 years old had a once-in-a-lifetime exclusion up to $125,000 if they owned and used the property as a principa l residence for at least three years of the five-yearperiod ending on the date of sale. Discuss why current law wit h respect to the sale of a personal residence is more favorable than the law prior to the Taxpayer Relief Act of 1997 .

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