Understanding the Over-55 Home Sale Exemption and Capital Gains Tax (1997)

The Over-55 Home Sale Exemption allowed homeowners aged 55+ to exclude up to $125,000 of capital gains from selling their primary residence but ended in 1997. The Taxpayer Relief Act of 1997 replaced it with broader benefits, allowing all qualifying homeowners to exclude up to $250,000 ($500,000 for couples) of gains if they owned and lived in the home for at least two of the five years before sale.