@jbonifacejr wrote:
even if we take $50,000 in depreciation over the next two years and sell it right at the end of that second year, we will likely only gain around $300,000 to $400,000.
The $500,000 exclusion does not cover depreciation. Depreciate the property.
As a side note, if/when you ever sell the other home, it will be partly taxable even if you lived in it for two of the last five years. Because it was rented and then you made it your Principal Residence afterwards, the gain and exclusion gets prorated.
