"Many home sellers made little profit or sold at a loss last year. But homeowners who bought years ago and benefited from the huge gains during the first part of this century might be pleasantly surprised. If you are married and meet the legal requirements described below, you can exclude up to $500,000 of the profit you have made.

If you are not married or file a separate tax return, the exclusion is reduced to $250,000 of the profit. You will not have to pay any tax on that portion of the excluded profit. For many years, two tax concepts helped save sellers from paying a lot of capital gains tax: The "roll-over" rule, which required that sellers buy another home that cost at least as much as the old one, and the "once in a lifetime" exemption for homeowners older than 55. But both were abolished in 1997. What exists is the $500,000/$250,000 capital gains exclusion. There are no restrictions on the number of times this exclusion can be used, but the law contains two important conditions:"

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Benny L. Kass is a Washington lawyer. For a free copy of the booklet A Guide to Settlement on Your New Home, send a self-addressed stamped envelope to Benny L. Kass, 1050 17th St. NW, Suite 1100, Washington, D.C. 200