Changes to $250 k/$500 k Exclusions on Home Sales Gains

Under the newly revised code, taxpayers can no longer take a full exclusion (up to $500,000 for joint filers) on gains from the sale of their primary residence if there was non-qualified periods based on the time it was designated as each. Also, portion of the gain assigned to the non-qualified period will not be excluded from homeowner income. So, if a real property was a rental for four years and then converted to a primary for six years prior to sale (a total of 10 years ownership), then 60% would qualify for exemption up to $500k joint threshold ($250K single).

State and Local Property Tax Deduction:
For tax year 2008, non-itemizing taxpayers can claim an additional real property tax standard deduction of up to $1000 for joint filers. This in addition to the standard deductions.