Section 121 of the Internal Revenue Code

Section 121 of the Internal Revenue Code allows homeowners to exclude up to $250,000 of capital gains ($500,000 for married couples filing jointly) from the sale of their primary residence, provided they have owned and lived in the property for at least two of the last five years. This exclusion helps reduce the taxable income from selling a home, encouraging homeownership and investment. However, certain rules and limitations apply, such as not being able to claim the exclusion multiple times within a two-year period.