What is the capital gains exclusion clock and why does it matter?

The capital gains exclusion clock refers to tracking how much of the required ownership-and-use period a seller has met as of the sale date, since the federal exclusion depends on living in the home as a primary residence for a meaningful part of the years before the sale. Moving out, renting the home to someone else, or living elsewhere for a stretch can all affect how much of that period still counts by closing. Falling short of the requirement can mean owing capital gains tax a full exclusion would have avoided. A CPA can calculate exactly where a specific seller stands.