@Just-Lisa-Now- The allocation of the gain between qualified and non-qualified use periods is actually very simple.  Gain is allocated using a formula or fraction based on the number of years the property was held for qualified use versus the number of years the property was held for non-qualified use as a percentage of the total number of years the property was owned by the homeowner. Here is an example:

A homeowner owned real property for ten (10) years.  It was held as rental property for the first eight (8) years and then converted to their primary residence for the last two (2) years.  The non-qualified use period is eight (8) years and the qualified use period is two (2) years.

In this example, 2/10ths of the total actual capital gain can be excluded from taxable income as qualified use under Section 121 and 8/10ths of the actual total capital gain must be included (not excluded) in the homeowner’s taxable income as non-qualified use under Section 121.