---
title: "Screen a home sale against the principal-residence exclusion"
url: "https://ailawframework.com/practice/taxation/screen-a-home-against-the-main-residence-exemption/united-states"
type: "task_jurisdiction_version"
site: "AI Law Framework"
id: "A26-PE20261022-18-US"
practice_area: "Taxation"
tier: "yellow"
lawyer_review: "required"
jurisdictions: ["US"]
last_reviewed: "2026-10-22"
---

# Screen a home sale against the principal-residence exclusion

> Record the dates the taxpayer owned the home and the dates the taxpayer used it as a principal residence during the five years ending on the sale.…

Canonical page: https://ailawframework.com/practice/taxation/screen-a-home-against-the-main-residence-exemption/united-states  
Last reviewed: 2026-10-22

Site index for agents: https://ailawframework.com/llms.txt

## Key facts

| Fact | Value |
| --- | --- |
| Practice area | [Taxation](https://ailawframework.com/practice/taxation.md) |
| Human involvement | Yellow: Lawyer and AI draft together |
| How AI is used | Record the dates the taxpayer owned the home and the dates the taxpayer used it as a principal residence during the five years ending on the sale. Note any earlier home sale on which gain was excluded in the two years before this sale, and whether the return is joint. |
| What the lawyer must review | 26 U.S.C. § 121 excludes gain on the sale or exchange of property if, during the five-year period ending on the sale, the taxpayer owned and used the property as the taxpayer's principal residence for periods aggregating two years or more. The excluded gain cannot exceed $250,000. The section substitutes $500,000 for certain joint returns when either spouse meets the ownership requirement, and Topic 701 states the joint pattern the lawyer applies: either spouse may meet the ownership test, and both spouses must meet the use test individually. Topic 701 also says the taxpayer generally cannot use the exclusion if gain from another home was excluded during the two-year period before the sale. The statute has a heading limiting the exclusion to one sale or exchange every two years. |
| Written for | United States |
| Applies to | [Screen a home against the main residence exemption](https://ailawframework.com/practice/taxation/screen-a-home-against-the-main-residence-exemption.md) |

## Checking plan

- What the AI does: Record the dates the taxpayer owned the home and the dates the taxpayer used it as a principal residence during the five years ending on the sale. Note any earlier home sale on which gain was excluded in the two years before this sale, and whether the return is joint.
- Basis: Checked against the linked sources on 22 October 2026. Confirm the current instrument before reliance.

## Notes

- Topic 701 says the ownership and use tests can be met in different two-year periods, but both must fall in the five years ending on the sale.
- Publication 523 has the full exceptions, including a reduced exclusion. Open it before advising that a shortfall in the two years is fatal.

## Sources

- [26 U.S. Code § 121 - Exclusion of gain from sale of principal residence](https://www.law.cornell.edu/uscode/text/26/121) (checked 2026-10-22)
- [Topic no. 701, Sale of your home](https://www.irs.gov/taxtopics/tc701) (checked 2026-10-22)

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*