If it is a married couple who have lived there for the past 5 years and the sale is under $500,000 then the exclusion is permanent.

So not considered "postponed"? Won't affect future sale of home where postponed previous gain reduces the basis of home sold? Second home sold doesn't qualify for exclusion because they missed the 5 year mark by 34 days. They had a previous exclusion of gain on home.a few years ago.

Thank you!!

I trust you both know that it is 2 years that they have to own and live in home.  Not 5.  So if they barely missed 5 years, that is OK.

So long as the Home Sales are more than 2 years apart.

They barely missed the 2 years.

34 days short of 2 years. Ugh!

"They had a previous exclusion of gain on home.a few years ago."

There are two different "2 year" rules. One is for ownership (2 of the past 5) and one is for other sales (not other sales closer than 2 years).

"Won't affect future sale of home where postponed previous gain reduces the basis of home sold?"

The rule for "you have to buy a more expensive home next time" is a couple of decades in the past. It was replaced with the exclusion rules.