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Magazines everywhere talk about the "Housing Boom" and how it is impacting Real Estate investors. 

There is a secondary effect, though, and it hits "regular people". 

As property valuations rise, homeowners can lose an enormous savings in the form of tax-free gains from the sale of their home.

Current federal tax law allows an individual to escape taxation on the first $250,000 of profit from a home sale provided it has been a primary residence at least two of the previous 5 years; the limit doubles to $500,000 for couples filing jointly. 

Any excess profit is a taxable capital gain that cannot be avoided, even by reinvesting in a new home.

So, if a home increases in value and the homeowner sells after the run-up, he may be subject to a substantially larger tax liability than if he had sold before the escalation.

Says Deerfield-based CPA Don Schaffer, "The bottom line is: if you want to make the most of the tax laws, don't hold your home too long in a rapidly increasing market."

Before doing anything, though, be sure to contact your estate planner or tax consultant for help in navigating the murky waters of federal tax law.

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.