TAX INFORMATION

SALE OF PERSONAL RESIDENCE

Gain on Sale of Personal Residence

(See additional information attached)

--	Effective for sales after May 6, 1997

--	Realized gain up to $500,000 (married couple) are excluded from taxable income

--	Applies to principal residence only

--	Taxpayer must have owned and used the property as his or her principal residence for at least two years during the five year period ending on the date of the sale or exchange

--	Exclusion allowed no more often than once every two years

Definition of principal residence

--	No specific definition

--	Facts and circumstance test:

a.	Bank account address

b.	Voting registration

c.	Drivers license address

d.	Time of occupancy

--	Tax strategy: If principal residence determination is unclear or flexible, develop strategy that would support principal residence as that location that has the greatest potential for appreciation. Alternative strategy is to consider principal residence as the location that most likely would be sold first.

Deductibility of Expenses -- Principal and Secondary Residence

--	Real estate taxes: No limit

--	Interest expense: Aggregate amount of debt cannot exceed $1,000,000 for interest to be allowable

Home Equity Loan

--	Interest expense is deductible for home equity loans up to $100,000. Principal or secondary residence can be used as collateral.