@curious4913 - because to be eligible for the exclusion, you must OWN and RESIDE in the house as your primary residence for 2 of the past 5 years. It's two tests: a) ownership and b) residency.
https://www.irs.gov/pub/irs-pdf/p523.pdf
On page 3, you must satisfy Step 2 (ownership) and then Step 3 (residency) to qualify.
So let's say you lived in the house for the past 2 years and the home was deeded to you yesterday, you meet the 2 year residency test, but not the 2 year ownership test.
why isn't is 'automatic' - because it is not the way Congress passed the law. 😉
