Tax Strategies for Homeowners

Editor's note: As a special feature for March, TheStreet.com offers an ongoing series on everything you need to know about taxes. Today is part 11.

If we weren't talking about Britney Spears (and her disappearing panties) in 2006, we were talking about the housing market.

And it was quite stressful. If you were one of the 12 million buyers and sellers last year, you were probably worried about buying high and selling low, as well as about fluctuating interest rates and the ever-pending housing market crash.

And now, to make matters worse, you've got tax issues to deal with this April. But we're here to help. So let's walk through some of the housing matters you may face.

Thank Goodness, It's Sold

With housing prices slipping last year, those easy gains of 2005 were a mere memory. And many of you probably said novenas each night, hoping you wouldn't have to lower your price again. But hopefully you were still able to eke out some gain on that sale.

Now let's make sure you don't owe tax on it. The home sale exclusion rules say that you won't owe tax on any gain up to $250,000 for a single person and $500,000 for a married couple, presuming you lived there as your primary home for two of the past five years.

But as much as prices were falling, some sellers still made money. It was not out of the question for someone to have purchased a $1 million Manhattan apartment three years ago only to have flipped it for $1.3 million last year.