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Should be an easy question. My wife and I are selling our house. We have a fair bit of equity in the house and have lived in it continuously for 4 years (since we bought it). I'm pretty sure the IRS states that if the residence has been the primary dwelling for at least 2 of the last 5 years then no (capital gains/regular income?) taxes are collected.

We have been living in the house since Oct 5, 2001 (the purchase date) but this is less than the 5 years mentioned by IRS. Do we need to own the house for 5 years or does the ownership require simply a MIN. of 2 years? Any income earned from the house would be less than $500,000 and we are not planning on buying another home for the next full year as we are moving out of state and would prefer to rent for awhile.

Thanks in advance for any help.

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