To qualify for the § 121 exclusion, the property must have been used by the taxpayer for the 5 years preceding the date of sale and owned by the taxpayer as the principal residence for the last 2 of those years.

Question

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The § 121 exclusion requires the property to have been owned and used as the taxpayer's principal residence for at least 2 out of the 5 years preceding the date of sale, not necessarily the last 2 years.

To Qualify for the § 121 Exclusion, the Property Must