Unfortunately, you have a very complicated situation. I believe the TurboTax will handle it correctly. But current IRS instructions do a very poor job of explaining. Because you have two periods of primary ownership with a period of rental in between, you have a period of non-qualified ownership, and that reduces your ability to exclude capital gains. You also must definitely pay depreciation recapture on all the depreciation that you claimed or could have claimed while using the home as a rental. I will post a longer answer later that explains the concept of non-qualified ownership. The short answer is, yes you must report the sale, yes you must pay recapture tax, and no, your gain is not all excludable.
