You can exclude up to $250,000 of gain ($500,000 if married filing jointly) on the sale of your home if you meet the Eligibility test.
Eligibility Step 1—Automatic Disqualification
Determine whether any of the automatic disqualifications apply. Your home sale is not eligible for the exclusion if ANY of the following are true: You acquired the property through a like-kind exchange (1031 exchange), during the past 5 years. See Pub. 544, Sales and Other Dispositions of Assets.
You are subject to expatriate tax. For more information about expatriate tax, see chapter 4 of Pub. 519, U.S. Tax Guide for Aliens.
If any of these are true, skip to Figuring Gain or Loss , later. Eligibility Step 2—Ownership
Determine whether you meet the ownership requirement. If you owned the home for at least 24 months (2 years) during the last 5 years leading up to the date of sale (date of the closing), you meet the ownership requirement. If you received Form 1099-S, Proceeds From Real Estate Transactions, the date of sale appears in box 1 of Form 1099-S. If you did not receive Form 1099-S, the date of sale is either the date the title transferred or the date the economic burdens and benefits of ownership shifted to the buyer, whichever date is earlier. (In most cases, these dates are the same.) Eligibility Step 3—Residence
Determine whether you meet the residence requirement. If your home was your residence for at least 24 of the months you owned the home during the 5 years leading up to the date of sale, you meet the residence requirement. The 24 months of residence can fall anywhere within the 5-year period. It doesn't even have to be a single block of time. All you need is a total of 24 months (730 days) of residence during the 5-year period. If you were ever away from home, you need to determine whether that counts as time living at home or not. A vacation or other short absence counts as time you lived at home (even if you rented out your home while you were gone). If you have a disability, and are physically or mentally unable to care for yourself, you only need to show that your home was your residence for at least 12 months out of the 5 years leading up to the date of sale. In addition, any time you spend living in a care facility (such as a nursing home) counts toward your residence requirement, so long as the facility has a license from a state or other political entity to care for people with your condition. If you have more than one home, see Main Home , earlier. If your home was destroyed or condemned, see Home Destroyed or Condemned—Considerations for Benefits , later. If you work for the government as uniformed or intelligence personnel, or are with the Peace Corps, see Service, Intelligence, and Peace Corps Personnel , later. Eligibility Step 4—Look-Back
Determine whether you meet the look-back requirement. If you did not exclude gain for selling a home on your tax returns for the previous two years (and you do not intend to do so on any returns or amended returns for the past two years that are not yet filed), you meet the look-back requirement. Eligibility Step 5—Exceptions
Check to see if there is anything about your situation that could affect your answer to Eligibility Step 2—Ownership through Eligibility Step 4—Look-Back. You'll need to review Does Your Home Qualify—Details and Exceptions , later, if any of the following are true: A marriage, separation, divorce, or the death of a spouse occurred during the ownership of the home.
The sale involved vacant land.
What you sold was a “remainder interest” (such as ownership of a home in which another person has the right to live for the rest of their life).
Your previous home was destroyed or condemned.
Eligibility Step 6—Review
Review your eligibility. If you meet the ownership, residence, and look-back requirements, your home sale qualifies for exclusion, skip to Figuring Gain or Loss , later. If you did not meet all the tests in Eligibility Step 1 through Eligibility Step 5, earlier, your home is not eligible for the full maximum exclusion. However, you may still be eligible for partial exclusion if you can show the main reason you sold your home was because of a change in workplace location, for health reasons, or because of an unforeseeable event. See Does Your Home Qualify—Details and Exceptions , later.
Eligibility Test
You can exclude up to $250,000 of gain ($500,000 if married filing jointly) on the sale of your home if you meet the Eligibility test.
Eligibility Step 1—Automatic Disqualification
Determine whether any of the automatic disqualifications apply. Your home sale is not eligible for the exclusion if ANY of the following are true:
You acquired the property through a like-kind exchange (1031 exchange), during the past 5 years. See Pub. 544, Sales and Other Dispositions of Assets.
You are subject to expatriate tax. For more information about expatriate tax, see chapter 4 of Pub. 519, U.S. Tax Guide for Aliens.
If any of these are true, skip to Figuring Gain or Loss , later.
Eligibility Step 2—Ownership
Determine whether you meet the ownership requirement. If you owned the home for at least 24 months (2 years) during the last 5 years leading up to the date of sale (date of the closing), you meet the ownership requirement.
If you received Form 1099-S, Proceeds From Real Estate Transactions, the date of sale appears in box 1 of Form 1099-S.
If you did not receive Form 1099-S, the date of sale is either the date the title transferred or the date the economic burdens and benefits of ownership shifted to the buyer, whichever date is earlier. (In most cases, these dates are the same.)
Eligibility Step 3—Residence
Determine whether you meet the residence requirement. If your home was your residence for at least 24 of the months you owned the home during the 5 years leading up to the date of sale, you meet the residence requirement. The 24 months of residence can fall anywhere within the 5-year period. It doesn't even have to be a single block of time. All you need is a total of 24 months (730 days) of residence during the 5-year period.
If you were ever away from home, you need to determine whether that counts as time living at home or not. A vacation or other short absence counts as time you lived at home (even if you rented out your home while you were gone).
If you have a disability, and are physically or mentally unable to care for yourself, you only need to show that your home was your residence for at least 12 months out of the 5 years leading up to the date of sale. In addition, any time you spend living in a care facility (such as a nursing home) counts toward your residence requirement, so long as the facility has a license from a state or other political entity to care for people with your condition.
If you have more than one home, see Main Home , earlier.
If your home was destroyed or condemned, see Home Destroyed or Condemned—Considerations for Benefits , later.
If you work for the government as uniformed or intelligence personnel, or are with the Peace Corps, see Service, Intelligence, and Peace Corps Personnel , later.
Eligibility Step 4—Look-Back
Determine whether you meet the look-back requirement. If you did not exclude gain for selling a home on your tax returns for the previous two years (and you do not intend to do so on any returns or amended returns for the past two years that are not yet filed), you meet the look-back requirement.
Eligibility Step 5—Exceptions
Check to see if there is anything about your situation that could affect your answer to Eligibility Step 2—Ownership through Eligibility Step 4—Look-Back. You'll need to review Does Your Home Qualify—Details and Exceptions , later, if any of the following are true:
A marriage, separation, divorce, or the death of a spouse occurred during the ownership of the home.
The sale involved vacant land.
What you sold was a “remainder interest” (such as ownership of a home in which another person has the right to live for the rest of their life).
Your previous home was destroyed or condemned.
Eligibility Step 6—Review
Review your eligibility. If you meet the ownership, residence, and look-back requirements, your home sale qualifies for exclusion, skip to Figuring Gain or Loss , later.
If you did not meet all the tests in Eligibility Step 1 through Eligibility Step 5, earlier, your home is not eligible for the full maximum exclusion. However, you may still be eligible for partial exclusion if you can show the main reason you sold your home was because of a change in workplace location, for health reasons, or because of an unforeseeable event. See Does Your Home Qualify—Details and Exceptions , later.
simple answer is: yes, this is the best. Check from your CPA the period for the 1031 exchange.