Under capital gains tax law, how long must a single person live in a house to take up to $250,000 in capital gains tax-free?

To qualify for the capital gains tax exclusion of up to $250,000 for single individuals when selling a primary residence, the homeowner must have resided in the home for at least two of the five years preceding the sale. This provision is designed to promote homeownership and help homeowners avoid paying taxes on appreciation that might occur during the period that they have used the property as their primary residence.

The law essentially permits homeowners to exclude the first $250,000 of capital gains—if single—from being taxed, provided they meet the residency requirement. It allows for some flexibility, as the homeowner does not need to occupy the house continuously or exclusively within that two-year timeframe, as long as they can demonstrate that they lived in it as their primary residence for the required period.

This framework is especially beneficial for those who may sell after having made substantial improvements or experiencing significant property value increases, enabling them to retain a larger portion of their profit without the burden of capital gains taxes.