What is the home sale capital gains tax exclusion?

The home sale capital gains tax exclusion lets a qualifying seller exclude a portion of the profit on selling their primary residence from federal capital gains tax, with a larger exclusion for a married couple filing jointly than for a single filer. To qualify, the IRS generally requires the seller to have owned and lived in the home as their primary residence for a set portion of the years before the sale. Gains above the excluded amount stay subject to capital gains tax, and investment or second homes do not qualify the same way. A CPA can confirm how this applies to a specific seller.