How often must a seller occupy their residence to qualify for capital gains tax exclusion?

To qualify for the capital gains tax exclusion, a seller must have occupied their residence as their primary home for at least two years out of the five years preceding the sale. This requirement allows homeowners to avoid paying capital gains taxes on profit earned from the sale of their primary residence, up to a certain limit ($250,000 for single filers and $500,000 for married couples filing jointly).

This rule is designed to encourage homeownership and helps individuals retain more of their home investment when they sell. The two-year timeframe does not have to be continuous; it can be accumulated over the five-year period leading up to the sale. This means that as long as the seller meets this two-year occupancy requirement, they can benefit from the exclusion, regardless of when exactly those two years were fulfilled within the five-year window.