First year for Section 121 exclusion?

[DonB]

Would someone tell me when Section 121 was enacted.

Thanks in Advance---

[kathyc2]

Exclusion is for sales after 5/6/97. It's actually in the code- 121(b)(3)(b).

[Roland Slugg]

Would someone tell me when Section 121 was enacted.

Well, there has been a §121 in the Code for many, many years, but I assume you are asking about the current one, providing for the exclusion of up to $500k upon the sale of a T/Ps primary residence.

The original enactment of the current version of §121 took place in 1997 as Section 312 of P.L. 105-34. The effective date was May 7, 1997, and that's why that date is used for depreciation "recapture" when a residence was used as business and/or rental property from that date forward. The 1997 law has been changed several times, in relatively minor ways, since enactment.

Prior to the May 7, 1997 effective date of P.L. 105-34, §121 provided for a once-in-a-lifetime exclusion of up to $125k of gain from the sale of a T/Ps primary residence if the T/P was 55-yo or more as of the sale date. That exclusion dates back to 1963 or 1964, and, like so many provisions of the IRC, was also amended several times from when it was first enacted up until 1997. Before 1981 the 55 age was 65, the 5-year holding period was 8 years, and the $125k was $100k. If you go back even farther, the $100k was lower yet, starting out at $20k and increasing to $35k in 1976.

[New York Enrolled Agent]

Roland - nice job on your post. Just a couple of small additions. The Revenue Act of 1964 (P.L. 88-272, section 206) added the new section 121 for sales after 12/31/1963. The ownership and use tests were 8 years/ 5 years and the first exclusion was $20K.

[Nashville]

Too Much Credit

I think we're giving this Slugg guy too much credit.

The probable truth is Roland is a grizzled veteran of years and years of tax practice. He is no doubt old enough to remember ALL of these changes and someone told me he even was recruited to help write the 1954 code because of his many years of tax practice at the time...

Sorry, Sluggo, - it takes one old grandfather clock to know one...