The Home Sale Exclusion: Up to $500,000 Tax-Free

Sell your main home and up to $250,000 of gain (single) or $500,000 (married) is completely federal-tax-free under IRC §121 — but the cap has been frozen since 1997 while home prices soared. Pass the 2-of-5-year ownership and use tests, then plan like a pro: raise your basis with every improvement receipt, know that only the gain over the cap is taxed, and dodge the rental, depreciation, and 1099-S traps.