Quite a confusing set of posts. I actually learned something in trying to reply to your post regarding "prorated home selling exclusion", first thought no way - but decided to check, here is a very good explaination: https://www.nolo.com/legal-encyclopedia/the-partial-home-sale-tax-exclusion-irs-approved-unforeseen-...
Good news is it appears to me that you qualify (and not sure it is important) but as we go thru this maybe I will change my mind. You have failed to provide the most important piece of information - the purchase price! So, here is how it works - take the purchase price, reduce it by the depreciation you took while it was a rental property, subtract that from the selling price and you get what? A gain? Than you reduce that by the credit but only to zero! You cannot use the credit for anything other than gain and if you had no gain, then the credit is not part of the calculation. Once again - you do not get to use the credit to create a loss - only tp zero out any gain. Hope this helped!
