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HOMEOWNERS age 55 and older can permanently exempt from tax up to $125,000 in home-sale profits.
Because the break can only be claimed once, sellers who had only a small gain on a sale had incentive in the past not to claim the exemption if they thought they could make better use of it on a future sale.
But it may pay for last year’s sellers to claim the exemption on 1996 tax returns–no matter how small the gain–if President Clinton’s home-sale proposal is approved by Congress. That’s because sellers would be covered on future sales by the President’s more generous exemption, which could be claimed for a home sale every two years.
