Abstract
For nearly five decades, the sale of a principal residence was not a taxable event to the homeowner under the Internal Revenue Code. The Taxpayer Relief Act of 1997 changed the tax treatment of gain on the sale of a principal residence by repealing the “rollover” rule and amending the one-time exclusion to allow a higher and more frequent exclusion. This Article analyzes national housing data prepared by the Federal Housing Finance Agency to demonstrate the consequences resulting from these changes, including the disadvantage to homeowners who fared better under the former law. This Article offers a solution to relieve this tax burden on homeowners by reinstating the rollover rule and giving homeowners the choice to apply the former law. Restoring the rollover rule through an election will mitigate speculative investing in principal residences and reduce the unequal application of the tax laws resulting from the disparity in housing prices throughout the nation.
Recommended Citation
Mark R. Siegel,
The Need to Look Back for Sales of a Principal Residence,
41
S. Ill. U. L.J.
67
(2016).
Available at:
https://opensiuc.lib.siu.edu/siulj/vol41/iss1/3