The new housing bill includes a tax code change that can affect owners of second homes and rental properties. If you bought the property before January 1 of 2009, there is no problem. You can still move into the alternate residence and stay there for two out of five years preceding a sale and use the $250,000/$500,000 residential property exclusion on gain.
Under the new law, this loophole will partially close on newly purchased investments. (Any previously owned rental and vacation properties are grandfathered in.) This is when it's time to consult your tax accountant. Sellers in future years will have to divide property use into qualified and non-qualified usage, and prorate the amount subject to capital gain exclusion. It's estimated that the government will raise about $1.4 billion in the next decade by making this change.
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