That is correct. It only takes two years, unless it was a rental property first. Then you would get a partial exclusion based on how many years you rented it to someone and how many years you lived in it. Example: If you rented it out for 2 years and then lived in it for 2 years and then sold it you would pay taxes on 50% of the capital gains (assuming they are under the 250,000 per owner threshold.) I just noticed your new reply. You should qualify for the full exclusion since you lived in it first and fulfilled the 2 year minimum.
