While individuals are allowed to exclude gain of $250,000 ($500,000 by a married couple filing a joint return) on the sale of property owned and used as a principal residence for at least two years in the five-year period ending on the date of the sale, they should still do everything possible to determine their basis in a principal residence.

Homeowners should especially make sure that they don't overlook any items that would increase the basis. If they own or use the property as a principal residence for less than two years, they may not be able to exclude any gain.

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