If a husband and wife own their principal residence jointly, both must meet the ownership and occupancy tests to exclude the gain under § 121.

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Under § 121 of the Internal Revenue Code, only one spouse needs to meet the ownership test for a married couple filing jointly to exclude gain from the sale of their principal residence. Both must meet the use (occupancy) test, and the exclusion is up to $500,000 for a married couple filing jointly.

If a Husband and Wife Own Their Principal Residence Jointly