Homeowners may now exclude up to $500,000 of gain from the sale of a principal residence ($250,000 for single taxpayers).

New rule applies to sales after May 6, 1997.

Old rules (deferral of gain and age 55 exclusion) have been repealed. However, taxpayers with sales or contracts signed after May 6, but before the date of enactment may use either the new rules or the old rules.

Exclusion may be used every two years, subject to complicated rules on five-year ownership, "unforeseen events," and marital status.