Buying and fixing up a house, then living in it for two years, will result in appreciation allowing for a tax-free profit of up to $250,000 (single) or $500,000 (married) upon sale.
"Buy a house, fix it up, live in it for two years, and it will appreciate. Everyone is entitled to sell their house and make up to $250,000 with no capital gains tax. And if you're married, half a million."