Sec. 1401. Exclusion of gain from sale of a principal residence
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Subsection
(a)of section 121 is amended— by striking 5-year period and inserting 8-year period , and by striking 2 years and inserting 5 years . Paragraph
(3)of section 121(b) is amended to read as follows: Subsection
(a)shall not apply to any sale or exchange by the taxpayer if, during the 5-year period ending on the date of such sale or exchange, there was any other sale or exchange by the taxpayer to which subsection
(a)applied. . Section 121 is amended by adding at the end the following new subsection: If the modified adjusted gross income of the taxpayer for the taxable year exceeds $250,000 (twice such amount in the case of a joint return), the amount which would (but for this subsection) be excluded from gross income under subsection
(a)for such taxable year shall be reduced (but not below zero) by the amount of such excess. For purposes of this subsection, the term modified adjusted gross income has the meaning given such term by section 2 determined after the application of this section but without regard to this subsection. . The last paragraph of section 121(b) (relating to exclusion of gain allocated to nonqualified use) is redesignated as paragraph (5). The following provisions of section 121 are each amended by striking 5-year period each place it appears therein and inserting 8-year period : Subsection (b)(5)(C)(ii)(I) (as redesignated by paragraph (1)). Subsection (c)(1)(B)(i)(I). Subsection (d)(7)(B). Subparagraphs
(A)and
(B)of subsection (d)(9). Subsection (d)(10) Subsection (d)(12)(A). Section 121(c)(1)(B)(ii) is amended by striking 2 years and inserting 5 years : The amendments made by this section shall apply to sales and exchanges after December 31, 2014.