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Tax Rule Changes President Biden Wants to Make

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When it comes to the tax code, President Biden has a long wish list of changes he'd like to make. In the first article of a three-part series, tax expert Julian Block provides the background information you need to understand the president's legislative agenda.

Jul 1st 2021
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There’s a lot to think about, so I’m going to break this topic into three parts.

Let’s start with Code Section 121. It authorizes a break long used by home sellers to lower their taxes, allowing millions of Americans to exclude––IRS lingo for escape––income taxes on sizable portions of their profits (as distinguished from and not to be confused with sales prices) from sales of their principal residences.

While the break benefits most sellers, the good news is tempered by some bad news.

Good: The profit exclusions provide the largest tax break that sellers will ever get, though they can’t completely sidestep taxes on profits from sales of their year-round homes, as distinguished from vacation retreats.

Section 121 imposes caps on the exemptions: $500,000 in profits for married couples filing jointly and $250,000 for those who file single returns or are married and file separate returns.

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