Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Capital Gain or Loss

Ownership and Use Tests

Period of Ownership and Use

To claim the exclusion on the gain from the sale of a home, the taxpayer must meet the ownership and use tests. This means that during the five-year period ending on the date of the sale, the taxpayer must have:

  • Owned the home for at least two years (the ownership test), and
  • Lived in the home as his or her main home for at least two years (the use test)

In addition, during the two-year period ending on the date of the sale, the taxpayer must not have claimed an exclusion on a gain from the sale of another home.

Tip

There are special rules for members of the Armed Forces, intelligence personnel and Peace Corps volunteers in the application of the five-year period. See "Five-year Test Period Suspension" later in this lesson.