Toll Brothers (TOL) posted a third-quarter profit of $42.1 million, or 25 cents per share, on revenue of $394.3 million. Compared to year-ago levels, the luxury homebuilder’s net income is up 54% from earnings of $27.3 million, or 16 cents per share, a year earlier. Meanwhile, third-quarter revenue is down 13% from last year. The Horsham, Pa.-based company attributes third-quarter profit growth to a tax benefit of $38.2 million. Homebuilders are allowed to claim a net operating loss, where taxes paid on profits in the past can be applied to quarters that would otherwise show a loss. Still, the builder is battling through a rough economy where housing demand remains anemic. Toll Brothers delivered fewer housing units in quarter three, completing only 693 homes compared to 803 last year. Building contract cancellations in the third quarter grew to a rate of 7.4%, up from 6.2% last year. “It is too soon to assess the ramifications of the financial volatility of the past few weeks on the housing market,” said Toll Brothers CEO Douglas Yearley.  “While late summer is generally not the best time to sell homes, in the short run, the stock market gyrations, the budget impasse, and the U.S. Government bond rating downgrade are certainly not helping consumer confidence. However, we believe that historic low interest rates and the growing imbalance between housing production and demographics-driven demand bode well for the industry sooner or later: the key question, of course, is when.” Despite weak consumer confidence and limited housing demand, Toll Brothers reported its fifth consecutive quarter of pre-write-down, pre-tax profits and said its distressed real estate loan and asset management subsidiary, Gibraltar Capital and Asset Management, contributed $4 million in profits during the third quarter. Looking forward, the builder expects to deliver somewhere between 2,475 and 2,675 homes in fiscal year 2011, with the average selling price in the range of $555,000 to $570,000. Write to: Kerri Panchuk.