Yes, you can exclude up to $250,000 of gain ($500,000 if married filing jointly) on the sale of your home if you meet the
eligibility test. This exclusion can be taken again, without limit, so long as the eligibility test is met each time.
Determine whether any of the automatic disqualifications apply. Your home sale isn’t eligible for the exclusion if either of the following are true.
You acquired the property through a like-kind exchange (1031 exchange), during the past 5 years.
See Pub. 544, Sales and Other Dispositions of As
sets.
You are subject to expatriate tax. For more information
about expatriate tax, see chapter 4 of Pub. 519, U.S.
Tax Guide for Aliens.
Ownership If you owned the home for at least 24 months (2
years) during the last 5 years leading up to the date of
sale (date of the closing), you meet the ownership requirement.
Residence If your home was your residence for at least 24 of
the months you owned the home during the 5 years leading up to the date of sale, you meet the residence requirement. The 24 months of residence can fall anywhere
within the 5-year period. It doesn't have to be a single
block of time. All you need is a total of 24 months (730
days) of residence during the 5-year period.
Look-Back If you did not exclude gain on the sale or exchange of a main home during the 2-year period prior to
the date of the sale or exchange of your current home,
you meet the look-back requirement. You may take the
exclusion only once during a two-year period. [Emphasis added.]
For more information, please see IRS Pub. 523 Selling Your Home.
