Although this sounds simple, we all know that nothing in the tax laws can be that easy. If you are married, so long as either spouse meets this requirement, the exclusion of gain applies.
Marital status is determined on the date the house is sold.
The exclusion is generally applicable once every two years. If you claim your mobile home or your boat as your principal residence, the law is also applicable. Real estate in many areas appreciated dramatically in the 1960s, 1970s and most of the 1980s. The profit that was made on each sale was deferred under the roll-over concept. Here is where the problem starts.