What is the capital gains exclusion limit for the sale of a principal residence?

The capital gains exclusion limit for the sale of a principal residence allows individuals to exclude a significant amount of gained profit from being taxed upon selling their primary home. In this context, the limit is a gain of $250,000 for single filers and $500,000 for married couples filing jointly. This exclusion can be applied to every sale of a principal residence, as long as the owner meets specific requirements, such as having owned and lived in the home for at least two of the five years preceding the sale.

Thus, the correct answer highlights that $250,000 for individuals and $500,000 for married couples is applicable per residence, not just simply as a total limit for an individual's lifetime or the aggregate of all residences owned. This distinction is important for homeowners looking to take advantage of tax benefits when selling their primary residence, as they can potentially sell multiple properties over time and qualify for the exclusion each time, provided they meet the necessary criteria.