" Can you please point me to an IRS regulation which states otherwise ?" Why? I've read through this thread and I don't see anything that could be interpreted as stating otherwise. If you lived in the property as your primary residence for at least two of the last 5 years you owned it, counting back from the closing date of the sale, then you qualify for the exclusion. Maybe someone disagreed with that statement before, and has since deleted their comment?
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