In IRS News Release 2007-134 issued on July 31, 2007, the Internal Revenue Service has granted an additional year to the time limit for victims of Hurricanes Katrina, Rita and Wilma to sell the vacant land upon which their home had sat and was destroyed as a result of the hurricanes.

Section 121 of the Internal Revenue Code generally grants an exclusion of up to $250,000 of gain ($500,000 for joint returns) on the sale of a home owned and used as a principal residence. With respect to homes that were destroyed by the hurricanes, in order for the sale of the vacant land to qualify for the exclusion, the land would generally have to be sold within two years of the home’s destruction. This news release grants the victims of the hurricanes an additional year to sell the vacant land and still qualify for the exclusion.