what was the over 55 home sale exemption 
the over 55 home sale exemption was a tax law that provided homeowners over age 55 with a one time capital gains exclusion individuals who met the requirements could exclude up to 125 000 of capital gains on the sale of their personal residences the over 55 home sale exemption has not been in effect since 1997 this exclusion was intended to stimulate the real estate market and reward homeowners for the purchase and subsequent sale of their homes it was replaced by other exclusions for everyone who profit from selling their principal residences regardless of age understanding the over 55 home sale exemptionthe over 55 home sale exemption was put into place to give homeowners some relief from the tax implications of selling their homes the exemption no longer exists as it was replaced by new rules when the taxpayer relief act of 1997 was ratified into law this act was one of the largest tax reduction acts to be put into place by the united states government 1under the old rule qualifying taxpayers could avoid making tax payments on the sale of their homes provided it was a primary residence taxpayers who took the over 55 home sale exemption would complete form 2119 with the internal revenue service irs the form was used even if the taxpayer postponed all or part of the gain to another tax year taxpayers were required to report losses that resulted from the sale of their home on form 2119 however according to the irs taxpayers could not deduct the loss from their tax burden 2at the time home sellers had an alternative to the exemption to avoid tax payments sellers could use the proceeds from the sale for the purchase of a more expensive home within a two year window 3qualification of the over 55 exemption