This can be a source of cash for the individual to use for retirement, investing, or any purpose. There is no limit to how many times a taxpayer can do this as long as the minimum use requirement is met.
Homeowners have an option to trade up or trade down on a tax free basis.
Most homeowners don't take full advantage of all the adjustments in order to keep the gain as low as possible. If the truth were known, most people's records are so poor that when the time comes to recognize the gain, the calculations probably have to be based on estimates instead of actual numbers. Effective date for sales of principal residence on or after May, 1997. Ownership and use must have been the principal residence for two out of the five preceding years. There is a formula to provide partial exclusion for those who cannot satisfy the two year requirement.