When it sounds too good to be true, it usually is, especially when the subject is U.S. government policy regarding income taxes. But this time is an exception – or more precisely, an exemption – which is not only real but also offers incredible opportunities to make money in real estate. In fact, many experts believe that the Universal Tax Exclusion Act is the best deal to ever hit the residential real estate industry – unless you happen to be gay.

For those who are members of the GLBT community, it is still sort of a wonderful deal. But it would be absolutely fabulous if it wasn’t followed by another slap in the face that we aren’t supposed to notice.

In the past, the elderly were pretty much the only ones who took advantage of an exclusion from capital gains taxes on the sale of their principal residences. Because it was a one-time deal, you could only use it once during your entire lifetime. It did not make sense to use the once-in-a-lifetime exclusion as a young person selling a home with very little capital gain. So in practice it became primarily a tax break for older folks, who could sell their residence, reap tremendous capital gains, and not have to pay taxes on those profits.

For example, a woman we know ordered a brick house through the Sears catalog (yes, it’s true, thousands of great homes were sold that way) back in the 1950s. She paid $15,000 for it (believe it or not), and paid it off in full before 1975. Later she sold it for a capital gain of more than $200,000. Using her one-time tax exclusion, she was able to keep that nest egg to fund her retirement.

Since the tax exclusion became “universal” (translation: everybody except gays), it can be used every two years, for as many times as you want. All you have to do is buy a house and live in it as your primary residence, for at least two years. After two years you can sell it and pocket the profits, without paying a penny in capital gains taxes. Then you can move into another house and do the same thing all over again.

Find the home of your dreams. Buy it in a rising real estate market. Live in it for two years (or more) and sell it for a profit. Use the proceeds to invest in another house. Many clever investors buy a house, live in it for two years, and while living in it, do updates and remodeling. Or, if the house is in good shape and in a popular area where prices are rising, they just live there and maintain it, without adding any significant equity. Then they sell it. In the recent real estate bull market, thousands of people used this strategy with great success.

Let’s say, for instance, that you buy a house worth $600,000 and it increases in value 10 percent per year, which is not unusual. That’s 60 grand a year, for just staying home and watching television while eating chips and salsa on the sofa. Not a bad gig, and you still have time to go to a real job, if you want to make some extra cash.

There is, however, a ceiling on how much profit you can make before you have to pay capital gains taxes. The amount is $250,000 per person. However, spouses are allowed to combine their exclusions, so a married couple can make $500,000 before they have to pay capital gains. Even if you aren’t good at math, you know that’s a mighty sweet deal.

Unless it’s against the law for you to marry the one you love, which is the big rub.

If you’re popping the champagne cork and toasting the benefits offered by the Universal Tax Exclusion Act, your fluted glass runneth over. But as you read the small print, you begin to understand the larger implications of the law, and realize that while some of us view the champagne glass as half full, others – namely GLBT couples – know that it is definitely half empty.

Consider how much money changes hands in the United States each year when GLBT couples buy and sell homes. How many millions are in a zillion? Now divide that number in half and you will have the answer to how much tax discrimination against gays is worth as it refuses to recognize gay partnerships. A whole lot.

We wish that the United States would add a room on to the house where our civil rights reside, to make some space under the roof of equality for the GLBT community.

That day will come.

In the meantime, the good news is that the Not Quite Universal Tax Exclusion may still save you a bundle of cash; and the experienced realtors at www.gayrealestate.com, who are committed to serving the GLBT community, can help.