IRC section 121 allows a taxpayer to exclude up to $250,000($500,000 MFJ returns) of the gain from the sale (or exchange) of property owned and used as a principal residence for at least two of the last five years before the sale.

A taxpayer can claim the full exclusion only once every two years

Ownership and use requirements.

The ownership and use requirements are based on the total number of days or months the taxpayer owns and uses the property as a principal residence during the five-year period ending on the date of disposition.


Capital gains are the profits from the sale of an asset: Shares of stock, Real estate, a business, are generally are considered taxable income. A lot depends on how long you held the asset before selling

Short term gains
is a tax on profits from the sale of an asset held for one year or less.

Long term gains
is a tax on profits from the sale of an asset held for more than a year. Long-term capital gains tax rates are 0%, 15%or 20% depending on your taxable income and filing status