Note: This article is not meant as tax or legal advice and you should always check with your Accountant and/or Real Estate Attorney to verify your current tax options.

It seems almost too good to be true: up to $500,000 in gains for sales of principal residences are now tax-free - $250,000 for singles and married couples filing separately.

Even better, this generous break can be “recycled” every two years. To qualify, you must have owned the home and must have used it as your main residence in at least two of the five years preceding the sale.

If you’ve ever considered buying a fixer-upper and selling it for a profit, this is the time to do it. You can live in the house for two years, do your repairs and then wind up paying no federal taxes on your gains of up to $500,000. Like the experience? You can buy another house and do it all over again.

We’re talking about the creation of a new industry here, so expect the prices of suitable properties to start rising as people catch on to the tax break.

On the other hand, if you’re now sitting on a hefty gain that could be entirely excluded under the new rules, think seriously about selling. You can replace the house with a less expensive one and invest the leftover cash.

And I wouldn’t waste much time - this rule is so favorable, I worry that it won’t be around too long.

PS - gains in excess of limits are taxed at a new 20% capital gains rate, down from former 28% and is scheduled to drop even further starting in 2001 to 18%