Did he sell it?

No. He uses his rental property for his principal home.

@ChiHoang 

Is he renting a portion of the home while he resides in it?

No

Can someone help to answer my question ? Thanks

If the rental property is no longer a rental property but is now the principal residence there is nothing to report on Schedule E.    Any expenses (repairs, utiltiies, etc) are now personal expenses therefore not deductible.    Mortgage interest, real estate taxes would be Schedule A deductions.

So when they sell that home if they stay in there more than 2 years, there is no tax on capital gain. Is it right ? 

@ChiHoang Since it was a rental for a period of time, most likely a prorated portion of the gain will be taxed. 

And gain to the extent of prior depreciation will be taxed.

Yes, recapture of depreciation. Thanks