The Section 121 exclusion lets eligible homeowners exclude up to $250,000 of gain, or $500,000 for certain married couples filing jointly, on the sale of a primary residence, provided you owned and used the home as your principal residence for at least two of the five years before the sale. Because the lookback runs five years, you generally have up to three years after moving out to sell and still qualify. You can’t use the exclusion more than once every two years, gain above the cap is taxable, and depreciation taken during a rental period can’t be excluded.
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