A growing number of homeowners, riding the crest of the real-estate boom, are getting hit by an unpleasant surprise when they sell: a hefty tax bill.

This development stems from a 1997 law that Treasury Department officials said at the time would eliminate capital-gains taxes for nearly everyone selling their primary residence. Under that law, most married couples who file jointly can exclude as much as $500,000 of their gain. For most singles, the limit is $250,000.

But as home prices have surged, more people have been selling their home for bigger gains than the exclusion amount -- and thus are facing unexpectedly big tax bills, accountants and other tax professionals say. Besides getting hit by the top 15 percent rate on capital gains, some also are facing the loss of deductions, exemptions and credits. In some cases, they may even be drawn into the rapidly expanding web of the alternative minimum tax.

Many sellers are startled to hear they owe any tax at all because they didn't realize the 1997 law erased a popular provision that had allowed them to avoid taxes. That provision generally allowed sellers to defer or eliminate capital-gains taxes by rolling over their proceeds within a specified time period into a new home costing as much or more than the old one. The law also deleted another provision that generally offered a once-in-a-lifetime $125,000 exclusion for people age 55 or older.

As a result, many people who thought they wouldn't owe taxes when they sell are now on the hook. Among those most likely to be affected are homeowners who bought many years ago and who live in hot real-estate markets such as California, New York, Hawaii, Florida and Washington, D.C. For example, the median price of an existing single-family home in the San Francisco area last year surged to $715,700 from $266,700 in 1996. The median price in Honolulu rose to $590,000 last year from $335,000 in 1996.

Though the Internal Revenue Service says it doesn't track how many people owe capital-gains taxes on their homes, accountants say more of their clients are paying them because many more high-priced homes are being sold. Last year, there were more than 827,000 single-family homes that sold for $500,000 or more, according to the National Association of Realtors -- up from 641,200 in 2004 and 66,100 in 1996. Though not all these home sellers will have cleared enough to have to pay the tax, many of them will.

These days, "it's not unusual at all" for an owner to have amassed a much bigger gain than the exclusion amount, says Richard Rampell, a certified public accountant in Palm Beach, Fla., and chief executive of Rampell & Rampell. In some cases, sellers don't discover this until after having sold.

One Florida couple, clients of Mr. Rampell, sold their home last year for $1.1 million. Their taxable gain was around $365,000, leaving them with an unexpected additional tax bill of about $60,000, which includes capital-gains taxes and the loss of certain other tax breaks, Mr. Rampell says.

"I rarely saw taxable gains on the sale of a home prior to the 1997 act," says Claudia Hill, an enrolled agent and the owner of Tax Mam Inc., a Cupertino, Calif. tax-services firm. Now, "at least 30 percent of my retirees are having to pay taxes when they sell the family home." Moreover, she says, many of her clients who have owned their home for lengthy periods are reluctant to sell because of the heavy tax hit they would take.

Under the 1997 law, to qualify for the full exclusion, you need to have owned the home and used it as your primary residence for at least two of the five years before the sale.

Alan E. Weiner, a CPA and tax partner at the firm of Holtz Rubenstein Reminick LLP, in Melville, N.Y., surveyed his firm's clients' tax returns and found these results: In the Manhattan office, 36 taxpayers sold their home in 2004 and 19 paid a tax. In 2001, 21 people sold their home and only six paid a tax.

The capital-gains tax isn't the only problem facing home sellers. A large capital gain can translate into even higher taxes for many people because of two other tax-law provisions, which are often referred to as "stealth taxes." These provisions limit your personal exemptions and certain itemized deductions once your income exceeds certain levels.

Here's how it works: Capital gains are included in your adjusted gross income. Once your adjusted gross income exceeds a certain level, you begin to lose certain itemized deductions and personal exemptions, adding another hit to your tax bill.

What's more, the higher income as a result of selling your house could force you to pay more by subjecting you to the alternative minimum tax. This parallel tax system -- which was originally designed to make sure high-income taxpayers couldn't avoid paying federal income taxes completely -- disallows personal exemptions and certain deductions, such as state and local taxes. Among those most likely to be hit by the tax are people with incomes between $200,000 and $500,000, according to the Tax Policy Center. Like the home-sale exclusion, the AMT wasn't indexed for inflation and is affecting increasing numbers of taxpayers.

For anyone thinking about selling, the rules underscore the importance of keeping good records of home-improvement costs, which typically can be added to your original purchase price -- and thus cut, or even eliminate, your tax bill. Examples of improvements include adding a bedroom or bathroom, putting up a new fence, installing new plumbing or wiring, and putting on a new roof. Even the cost of putting in shrubs and trees may qualify as "improvements" and raise your cost basis, according to the Ernst & Young Tax Guide 2006. But the cost of repairs, such as repainting your home or fixing gutters, can't be added to the purchase price of your property, the IRS says. For details, see IRS Publication 523 (www.irs.gov).

"When the $500,000 exclusion rule came into the law, a lot of people figured they'd never have that much gain, so they stopped keeping records of the improvements they made to the house," says Tom Ochsenschlager, vice president-taxation of the American Institute of Certified Public Accountants. "That could mean they'll wind up paying more tax than they should have."

An IRS plan to hire private bill collectors runs into another delay.

IRS officials recently announced plans to hire three collection firms in the first phase of a controversial project to help the government recover large amounts of unpaid taxes. But the IRS says two companies that didn't get the contracts have protested, and the IRS has issued a "stop work" order to the three firms.

While the issue is being resolved, the IRS "will continue to prepare for debt-collection work to begin," a spokesman says.

Here's a chance to talk back to the IRS.

The IRS is looking for "civic-minded" people to serve on its Taxpayer Advocacy Panel and make suggestions about IRS decision-making. Among the panel's tasks are to "identify and prioritize" taxpayer issues and make recommendations to the IRS and Treasury on customer-service issues.

To qualify, you must be a U.S. citizen and "able to commit 300 to 500 hours" during the year. You have to be current with your tax obligations and able to pass a criminal background check.

Applications, which are due April 28, are available at www.improveirs.org, or by calling 888-912-1227.

BRIEFS: Who's News: Sarah Hall Ingram, deputy commissioner of the IRS's tax-exempt and government entities division, will take over in May as chief of the appeals division, succeeding David Robison, who is retiring, an IRS spokesman says. ... Taxing humor: "Taxpayer Blues" is a CD from Ruby Tunes LLC (www.taxpayerblues.com) that includes such songs as "The Taxpayer's Polka," "Battle Hymn of the Taxpayer" and "The IRS Audited Me and Ran Off With My Wife." Phil Fragasso of Wellesley, Mass., is executive producer.