According to Nitti, Section 121 of the Internal Revenue Code has, for the past 22 years, allowed homeowners of any age to exclude gain on the sale of a “principal residence” provided that the following three standards are met:
- You owned the home for two of the five years preceding the sale (the “ownership test),”
- You used the home for two of the five years preceding the sale (the “use test”), and
- You haven’t taken advantage of the Section 121 exclusion in the two years preceding the sale (the “once-every-two-years rule”).
Download the full article by clicking Nitti, You Sold Your House — Is The Gain Taxable?
