Goodspeed: Residency requirement the same in new tax law
QUESTION: At one time, the new tax law was going to make changes to the exclusion of gain allowed home owners when they sell their primary residence. Did those changes happen? Or is everything still the same?
ANSWER: Still the same.
Some early drafts of the new law did propose changing the two-out-of-five-years residency requirement to claim the exclusion to five-out-of-eight-years. That did not happen. That means everything is still the same: Homeowners can exclude up to $500,000 of gain ($250,000 for single tax filers) on the sale of a primary residence as long as they have lived in the home for two out of the last five years.
Paying for the elevator
In response to a question from a reader who did not think he should have to pay to maintain an elevator in his condominium building because he lived on the first floor and did not use it, I replied that every homeowner in a condo association must pay his/her share of the common expenses, including special assessments whether they used the common element or not.
Another reader wrote in agreeing with my response, but wanted to add the following point: The value of the condos are a reflection of features, amenities etc. so even if the owner does not use the elevator (pool, tennis courts, etc.), they directly benefit by what these amenities do to their condo’s value.
“If they only want to pay for what they directly use, they should not be living in a condo,” the reader went on. “And it would be splitting hairs to say that only the people who use an amenity should pay. What if I live on the fourth floor, but regularly take the stairs? Do I still have to pay for the elevator?
“The same is true for a town/city. Not everyone uses the school system, lives by the beach, utilizes park land, etc. but a community’s home prices and property taxes (and reputation) are reflective of the quality of the schools, open area, etc.”
All are good points. Thank you.
Linda Goodspeed is a longtime real estate writer and author of “In and out of Darkness.” Email her at: email@example.com.