Rent-to-own rarely protects the 2-of-5 tax exclusion; more often it runs out the clock on it. Go in clear-eyed on the deal itself. In our experience these arrangements mainly make sense for a seller in a declining market who wants to lock in a buyer now, and they carry real risk that the tenant-buyer never qualifies or closes. Tenant protections cut against you too: in states like California, removing an occupant who is legally a tenant can be slow and difficult if the arrangement falls apart. On the tax piece, the IRS Section 121 exclusion generally requires that you owned and lived in the home for two of the last five years, currently up to $250,000 of gain if single or $500,000 if married filing jointly (confirm current thresholds). The clock is the real problem. Once you have been out of the home long enough to fail the two-of-five test, the exclusion is gone entirely, so stringing out a rent-to-own can push you past the deadline rather than protect it. If you qualify for the exclusion today, there is usually no tax reason to wait unless you genuinely expect meaningful appreciation. Confirm the current rules and your timing with a tax professional before you structure anything around them.