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    On October 22, 2004, President Bush signed tax legislation that contained a provision affecting Internal Revenue Code section 1031 (the like-kind tax-free exchange rules).

    Under this new provision a taxpayer who exchanges under Internal Revenue Code section 1031 into a rental house as a replacement property for a previous investor property and later converts it to his or her primary residence, is not allowed to exclude gain under the principal residence exclusion rules of Internal Revenue Code section 121, unless he/she sells the property at least five years from the date of its acquisition.

    The results of this additional requirement to Internal Revenue Code section 121 is that anyone exchanging into a rental property that they such subsequently convert to personal use will have to wait at least five years from the date of acquisition before they can sell it as their residence and exclud

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    der this new provision a taxpayer who exchanges under Internal Revenue Code section 1031 into a rental house as a replacement property for a previous investor property and later converts it to his or her primary residence, is not allowed to exclude gain under the principal residence exclusion rules of Internal Revenue Code section 121, unless he/she sells the property at least five years from the date of its acquisition.

    The results of this additional requirement to Internal Revenue Code section 121 is that anyone exchanging into a rental property that they such subsequently convert to personal use will have to wait at least five years from the date of acquisition before they can sell it as their residence and exclu

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    rts it to his or her primary residence, is not allowed to exclude gain under the principal residence exclusion rules of Internal Revenue Code section 121, unless he/she sells the property at least five years from the date of its acquisition.

    The results of this additional requirement to Internal Revenue Code section 121 is that anyone exchanging into a rental property that they such subsequently convert to personal use will have to wait at least five years from the date of acquisition before they can sell it as their residence and exclu

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    erty at least five years from the date of its acquisition.

    The results of this additional requirement to Internal Revenue Code section 121 is that anyone exchanging into a rental property that they such subsequently convert to personal use will have to wait at least five years from the date of acquisition before they can sell it as their residence and exclu

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    l property that they such subsequently convert to personal use will have to wait at least five years from the date of acquisition before they can sell it as their residence and exclude any gain under Internal Revenue Code section 121.

    The change to the home seller rules of Internal Revenue Code section 121 became effective for principal residence sales occurring on or after October 22, 2004. Any taxpayer who previously acquired their current residence through a tax-deferred exchange within the past three years will now have to wait at least another two years before selling their home and excluding any gain, provided they meet the two out of the five-year occupancy test for living in the property.

    New legislation created in 1997/1998 allows taxpayers to exclude capital gains tax on their profits from the sale of their principal residence up to $250,000 for single taxpayers and up to $500,

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