Q. Should we enter this as the sale as our primary residence?
A. Yes.
You meet the rule that it must have been your residence for at least two out of the five years prior to the sale. That answer assumes you haven't sold another primary residence in the last two years.
How was the property used since you moved out? You still qualify for the capital gain exclusion, even if you used it as rental property, but you will have to do depreciation recapture, even if you didn't actually claim depreciation.
