Revocable Trusts Can Keep the Home-Sale Tax Break | Strategically priced. Expertly marketed. Under agreement in less than two days.

A revocable living trust is ignored for income taxes, so a married couple can still use the full $500K home-sale exclusion when selling.
For the full exclusion, one spouse must meet ownership rules, both must meet the 2-of-5-year use test, and neither used another exclusion within 2 years.
Retitling the home into the trust did not change basis, so owners should keep the trust, original closing statement, and improvement receipts.
Once a trust becomes irrevocable, it can become a separate taxpayer and generally loses the exclusion because the trust cannot satisfy the home's use test.
A surviving spouse can keep the $500K cap by selling within 2 years of death; after that window, the limit usually drops to $250K.