What is the required duration of occupancy for a property owner to qualify for a $250,000 exclusion?

The required duration of occupancy for a property owner to qualify for a $250,000 exclusion, specifically under the Internal Revenue Code Section 121, is indeed 2 years. This exclusion allows homeowners to exclude the gain from the sale of their principal residence from their taxable income, provided they have owned and occupied the property as their primary residence for at least 2 out of the last 5 years preceding the sale.

This 2-year period can be cumulative, meaning that it doesn’t have to be consecutive; the homeowner can combine different periods of occupancy as long as the total adds up to 2 years. This provision is particularly beneficial as it encourages homeownership, allowing individuals to sell their homes without facing significant tax implications on their profits if they have lived in the home long enough.

Other options, such as 6 months, 1 year, and 5 years, do not meet the requirements outlined in tax regulations for the exclusion. Specifically, 6 months and 1 year fall short of the necessary 2-year occupancy period, while 5 years exceeds what is required, as taxpayers only need to occupy the home for a maximum of 2 years within the 5-year window leading up to the sale. This makes 2 years not