TAX BREAK

A new nice tax break concerns capital-gains tax on the sale of a principal residence when a person's spouse dies. Federal law allows singles and married couples to exclude $250,000 and $500,000, respectively, of the gain on the sale of their home from capital-gains tax if certain tests are met.

The differential treatment on the basis of marital status meant that a person whose spouse died had to sell his or her home in the same tax year as the spouse's death to take advantage of the larger tax break.

"If your spouse died in December, unless you could sell by Dec. 31, you could only exclude $250,000, instead of $500,000, so you could end up with a horrendous tax bill on the sale of the home, whereas if your spouse died in January, you didn't have that problem."

However, the new law allows a surviving spouse to claim the $500,000 if the home is sold within two years after the date of the spouse's death, which eliminates the tax liability on an additional $250,000 of capital gain if the other tests are met as well.

So, spend the tax-free capital gain from the sale of your home here in Tyler, Texas. Because you probably will put a lot of it in the bank. See John, at http://www.johncmartin.com/.