To amend the Internal Revenue Code of 1986 to provide for an exclusion of capital gains upon the sale of a principal residence.

Amends the Internal Revenue Code to exclude up to $250,000 ($500,000 jointly) of gain on the sale of a principal residence if owned and used as the principal residence for periods aggregating at least two years during the five-year period prior to sale or exchange.

Sets forth special rules relating to: (1) jointly held property; (2) a deceased spouse; (3) a cooperative housing tenant-stockholder; (4) partial principal residence use; (5) determination of marital status; (6) acquisition after involuntary conversion; and (6) periods of out-of-residence health care.