thank you mike, regarding non-qualified use, it looks like the IRS treats appreciation on capital from the time in which it was purchased. so even if all gain was made during periods of qualified use, (lets say years 0-19 were gain years and you lived there), and lets say the property lost value for the 2 years of rental (years 20-21), you cannot take a loss on capital, but must prorate the gain as such:
2 / x, where x = the total number of years you had the home. or 2 / 21 * 21 year appreciation.
I was thinking you could get a appraisal on the property at the time of first rental use (year 19) and then gains either accumulated or went down from there (year 21 valuation - year 19 basis), rather than be pro-rated over the life of the ownership (year 21 valuation - year 0 basis).
