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the rule is a taxpayer must own and use the property as their principal residence for any 2 out of 5 years before the sale.
if you meet these rules you're entitled to exclude from taxation $250,000.
if you're married one must meet the ownership test but both must meet the use test. if so, the exclusion is $500,000
if the property was used as a rental property at any time during your ownership certain other rules apply.
"Equity" is not the same as capital gain. For example, you buy a house for $100,000 and make a down payment of $20,000. 3 years later, the home is worth $150,000. Your equity is $70,000, but your capital gain is only $50,000.
The net capital gain is reduced by expenses of sale (real estate commission etc,).
If there is still any gain, after the home sale exclusion, it will be partially taxed at 0%, 15%, 20% or 23.8%, depending on your other income. https://www.thebalance.com/what-is-the-capital-gains-tax-3305824
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