If an individual has owned a home for 7 years, lived in the home for 5 years and has rented the home for the past 2 years, does he still qualify for the exclusion of gain?

[LaraMultiservices]

I have a client that has owned a home for the past 7 years, after living in that home for 5 years, he decided to move to a different house and rent it out. I want to make sure he still qualifies for the exclusion of gain. Would having the house rented for 2 years make any difference?

[TaxGuyBill]

It sounds like it was his Principal Residence for at least 2 of that last 5 years, so yes, it sounds like he qualifies for the exclusion (but depreciation is not eligible to be excluded).

[Accountant-Man]

Read the rules: the owner must have owned and lived in it for 24 months out of the 60 months prior to the sale date. 

Owned and lived  in it 60 months, rented it for 24 months(I assume for the last 24 months it was owned before sale.

Counting backwards from sale date, rented 24 months, owned and lived in it for the prior 36 months of the total 60 prior to sale. How does that work for you?

If you still have questions, hire a professional.

[Taxprohere]

@Accountant-Man  ouch!  I think the OP just wanted to be certain, give the two years rental interceding.

[Accountant-Man]

It's really very easy-once you have satisfied the 24 months owned & lived in, and you move out, YOU HAVE 36 MONTHS TO SELL IT AND STILL CLAIM THE EXCLUSION.

Although not all of the gain from purchase to sale can be excluded.