Financial Concerns

Capital Gains Tax Revisions:

The Taxpayer Relief Act of 1997, signed into law in August of 1998, will provide $91 billion in tax cuts over the next five years. A good share of these cuts are in the form of tax relief on real estate. Through the extensive efforts of the NATIONAL ASSOCIATION OF REALTORS®, significant benefits are now being offered to both homeowners and owners of investment properties.
The new law increases to $500,000, the amount of profit a home owning couple can receive tax free on their principal residence, regardless of age. Single owners can exclude up to $250,000 in tax free profit. The provision is effective for sales on or after May 7, 1997. It replaces and improves the rollover and $125,000 exclusion rules that were previously in place. Homeowners can use the new exclusion at any age and as often as every two years on their primary residence.

First-Time Buyers Get a Boost with New IRA Rules

The 1997 Taxpayer Relief Act gives first-time buyers a provision to allow penalty-free withdrawals of up to $10,000 from Individual Retirement Accounts for the downpayment and closing costs of a home purchase. Withdrawals can be made from current IRA's beginning January 1, 1998, and can be made from the IRAs of spouses, parents, children, grandchildren or ancestors, as long as they total no more than $10,000.

New York's STAR Program Offers Owners Relief

Governor George Pataki's "STAR" (School TAx Relief) program will cut school taxes for the average homeowner by 27%. If the Legislature approves the STAR program, every homeowner will see school taxes decline. The program includes:

  • $1.7 billion for direct school tax cuts that will be passed along to homeowners.
  • An additional $1.7 billion in state aid to school districts for enrichment programs.
  • Incentive aid for districts that freeze or reduce tax levies with additional incentives for controlling administrative costs.
  • A 4-percent cap on future increases in school tax levies.
  • STAR requires changes in local government assessment practices to eliminate gross inequities in taxing practices.


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