Prior to the Taxpayer Relief Act of 1997, taxpayers could defer a gain on the sale of a principal residence sold before May 7, 1997, if they purchased and occupied a new principal residence within two years before or after the sale and the cost of the new residence was at least equal to the adjusted sales price of the old residence. Some taxpayers who were at least 55 years old had a once-in-a-lifetime exclusion up to $125,000 if they owned and used the property as a principal residence for at least three years of the five-year-period ending on the date of sale. Discuss why current law with respect to the sale of a personal residence is more favorable than the law prior to the Taxpayer Relief Act of 1997.

Select the reasons why current law is more favorable than the law prior to the Taxpayer Relief Act of 1997 with respect to the sale of a personal residence. (Select all that apply.)

A. The amount that may be excluded is higher ($250,000 or $500,000).

B. To use the exclusion today, the property must be used and owned as a principal residence for at least two years, not three, of the five-year period before the sale.

C. A loss on the sale or exchange of a personal residence is deductible.

D. The exclusion may be used by a taxpayer more than once during his/her lifetime and regardless of age.

E. To use the exclusion today, the property must be used and owned as a principal residence for at least one year, not three, of the five-year period before the sale.

F. With the current law, gain is always excluded, not deferred.

G. The amount that may be excluded is higher ($200,000 or $400,000).

H. With the current law, gain is always deferred.