The "2 of the last 5 year rule" in U.S. real estate allows homeowners to exclude up to $250,000 ($500,000 for married couples filing jointly) of capital gains from their income when selling their primary residence, provided they meet two criteria: they must have owned the home for at least two years and lived in it as their primary residence for at least two years within the five-year period ending on the sale date.

Wife and I recently married.

I would never recommend people mix finances and /or share mortgage when they are not married.

I don't think they are married, but refer to themselves as "partners", and appear to have been co-habitating prior and during grad school. 

Got to marry right. 

Taking out $500K of tax free money (sounds like Section 121 (married)) through the sale of the property is great if you're trying to scale your portfolio.

If one bids on the house, lives there couple months and ends up being married and living elsewhere - this was not a violation of the HUD rules back in 2004!

Remember your partner isn't going to want to marry you for the balance of the 30 years.

I'd really appreciate feedback with regard to whether I should move forward with investing in real estate, or to let the desire go for the time being: I'm 34-years old, married, have 2-children under the age of two, own a home, and have a stable and good paying job.

, you are allowed to earn 500k married (250k single) before getting hit with taxes if the house is your primary residence for at least 2 years.