The Internal Revenue Service has issued final regulations on the exclusion allowed for gain on the sale of a principal residence. The final regs modify the rules contained in temporary regulations with respect to partial home-sale exclusions. They also provide special rules for military and foreign-service personnel.

An individual can exclude from gross income up to $250,000 of the gain from the sale or exchange of a home that he owned and used as a principal residence for at least two of the five years before the sale or exchange. However, the exclusion isn’t available if there was another sale of a principal residence by the taxpayer to which the exclusion applied within the two-year period ending on the date of the exchange.

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