Last week's Real Estate Happenings column should have stated that $35,000 of any profit on a principal residence is not forgiven by Internal Revenue Service for persons 65 or over. The $35,000 is an exclusion base. If the sale price of the house was $35,000 or less, there would be no tax - regardless of the original price paid for it. However, if the house is sold for more than $35,000, the excludable gain is that portion (or ratio) of the total amount of gain as $35,000 is to the adjusted sales price, according to IRS. For instance, a house bough originally for $30,000 and sold at a price to give an adjusted sales price of $50,000 would show a net gain of $20,000. The excluded amount of the profit would be figured $35,000 divided by $50,000 x $20,000 equals $14,000. Thus $6,000 of the $20,000 gain would be subjected to captial gains tax for the person 65 or over selling a principal residence.

THE HOUSE-passed $100,000 "forgiveness" for income tax purposes on profits made in selling homes has already stirred considerable interest among homeowners whose houses have appreciated remarkably in recent years.

Rep. Sam Gibbons (D-Fla.), a member of the House Ways and Means Committee, describes the provision as "the most popular legislative action with which I hve ever been associated."

Gibbons, who sold his own family home in McLean three years ago and made a healthy profit, moved with his wife to a less expensive condominium apartment on Capitol Hill.

"It seemed like a reasonable thing to do because our children had grown up," he said. "But the capital gains tax on our net profit seemed exorbitant because the purchasing power of the dollars of profit were certainly worth less, through inflation, than there were when we bought that house 14 years earlier."

An eight-term member of Congress who served 10 years in the Florida legislature, Gibbons said that the mood of the House Ways and Means Committee, where the bill originated, was to provide some relief for families whose principal net worth has been built up in the equity and profit on the houses they occupy. He said he suggested no limit on the tax forgiveness on net profit but came up with $100,000 figure when the committee indicated it wanted ceiling on the capital gains break provision.

The tax bill will now be considered in the Senate Finance Committee, which has scheduled hearings after the Labor Day recess. Gibbons said he has had extremely favorable reaction to the $100,000 provision and is confident that it will become part of a law he anticipates that President Carter will sign.

However, other Capitol Hill legislative sources indicate that there's a chance Senate Finance Chairman Russell Long and his committee may have other ideas. They may use another form of capital gains tax relief to aid the same homeowners who stand to benefit when they sell their houses at a big profit.

The real estate industry and many homeowners view the $100,000 exemption as a long-overdue break for people who want to sell their houses and move into something smaller - or opt for rental housing - before reaching age 65. At that age, $35,000 of any profit on a principal residence is forgiven by Uncle Sam and his IRS brigade.

"It would provide needed tax relief to many different classes of people whose home ownership is their principal hedge against inflation," commented Kenneth Woodring Jr., president of the Prince George's County Board of Realtors.

Charles Jamison, president of the Montgomery County realtors' board, said the House provision has a "lot of merit." He said he has a number of clients in their 50s who want to buy smaller houses rather than plowing proftis from their houses into more expensive dwellings to avoid paying capital gains tax.

Those taxes on the profits from the sale of a principal residence are delayed, or "rolled over," if the seller buys another house at the same or a higher price. The tax is due if sellers do not buy more expensive houses within 18 months of the sale.

Charles Phillips Jr., president of the area chapter of the National Association of Home Builders, said that the market should increase for smaller, less expensive houses "designed for empty-nesters under 65." He also said that more larger houses are likely to be put on the market by owners who have seen their children grow up and move out.

Nonetheless, a spokesman for the Washington office of the National Association of Realtors insisted that the $100,000 provision would "have very little impact on the house marketing." NAR legislative and research staffers stressed that it is unlikely that the market would be flooded with houses by people wanting to realize paper profits and to avoid a heavy tax burden. Most people own their houses for reasons other than "profit potential," according to the NAR view.

But it would be profit potential and the opportunity for a once-in-a-lifetime tax break on selling a principal residence that would motivate many couples over 50 and under 65 to sell without waiting for the at-or-after 65 tax break of $35,000, which would be phased out if the $100,000 provision is in the final bill.

Leaders of the Northern Virginia Board of Realtors got together to assess the impact of the $100,000 provision and described it as sound. They expressing a preferance for retaining the $35,000 break at age 65 and improving the capital gains tax structure on profits.

Donald Childress, president of the board, said that the $100,000 break might encourage more residents of cold climes in the Northeast to sell older houses and move to the Southwest. He also said that negative implications of such a tax break might be that local governments would raise taxes on property transfers, or that the Congress might change the provisions after a few years.

On balance, it does seem that the $100,000 provision would encourage even more persons to become homeowners in the expectation of gettin a tax break on a paper (or inflation) profit likely to accrue through the years. Certainly, more owners are likely to grab their profits and run before waiting until age 65 to make a move. Many of those persons might choose to go into rental housing and such decisions could stimulate the market for the construction of private rental housing for moderately well-to-do couples and persons.