If I own 2 homes and sell one of the houses, is thei rstill a one-time cap. Gains write-off as far as the IRS is concerned? If so what about cap. Gains per the state concerning that write-off?

Assuming you are married filing jointly, you can sell your home for up to a $500K gain without having to pay capital gains tax. It's not a one-time deal, but the rules state that the house must have been your main residence for at least two of the previous five years (in other words you can't take the exclusion on a vacation home), and you can't exclude the gain if you already took an exclusion on the sale of another home within the two years of the sale.

More info here:http://www.irs.gov/taxtopics/tc701.html

Thanks, you explained a lot. Since I am a widower this year, I might have to sell the primary home to take the write-off before next year as I will have to file single next year. Or if I leave it to the kids that would eliminate the cap. gains, correct? If I want to sale this year, I need to start cracking.

Yes, if you leave it to your children in a will, there is NO capital gains if they sell it, as it will be valued at the FMV on the date of your demise.