Code Section 121

Homeowners who have resided in their residence for at least two of the last five years may be eligible for the principal residence exclusion allowed under section 121 of the internal revenue code.

Code section 121. Section 121 a generally provides with certain limitations and exceptions that gross income does not include gain from the sale or exchange of property if during the 5 year period ending on the date of the sale or exchange the taxpayer has owned and 8. Section 121 26 u s c 121 the internal revenue code section that addresses taxable income upon the sale of a principal residence an unmarried individual may exclude up to 250 000 of gain from income married persons filing joint returns may exclude up to 500 000 of gain the taxpayer must have owned and occupied the property for at least 2 of the prior 5 years and this exclusion can be used as frequently as every 2 years for many americans this ability to buy a home fix it up sell it in. Section 121 of the internal revenue code of 1986 as amended by this section shall be applied without regard to subsection c 2 b thereof in the case of any sale or exchange of property during the 2 year period beginning on the date of the enactment of this act if the taxpayer held such property on the date of the enactment of this act and fails to meet the ownership and use requirements of subsection a thereof with respect to such property.

Single taxpayers are entitled to a 250 000 exclusion and married taxpayers filing jointly are entitled to a 500 000 exclusion.