What act reduced several federal income taxes on Capital Gains?

The Taxpayer Relief Act of 1997 is recognized for its significant changes to the tax treatment of capital gains. This legislation introduced preferential rates for long-term capital gains, specifically lowering the capital gains tax rate for many taxpayers and allowing for a greater exclusion of gain from the sale of a principal residence.

One of the key aspects of this Act was the provision that allows individuals to exclude up to $250,000 in capital gains from the sale of their home, with married couples filing jointly able to exclude up to $500,000. This marked a substantial reduction in the taxable gain and provided important advantages for homeowners looking to sell their properties.

This legislation was pivotal in encouraging homeownership and investment in real estate since it made the tax implications of selling a home more favorable, thus stimulating the housing market.

The other options, while related to tax and housing policy, do not pertain specifically to the reduction of federal income taxes on capital gains. The Tax Reform Act of 1986, for example, aimed to simplify the tax code and made a host of changes, but did not focus on capital gains taxation in the same beneficial way as the 1997 act did. Similarly, the Homestead Exemption Act and the Fair Housing Act