if both spouses own homes and each meets the ownership, use and frequency (neither spouse excluded gain from sale of another home in the two years ending on date of sale of the current home) each spouse can exclude up to $250,000 gain on sale of their own home). the question I can not answer for certainty is whether your ownership of the 2017 home disqualifies you from using this rule. (the sale of the 2017 home could be deemed as a sale of a second home by you within the 2 year period). I read the frequency rule as qualifying both of you to exclude only 1 home sale. You also have to recapture the depreciation you took or should have taken on your home during the period it was rental. it may not matter whether you file as Married filing separate because of your ownership and sale of 2 homes within a 2 year period.
