I have owned a home for the last 5+ yrs, living in it for 3 yrs and renting it for the last 2+ yrs. We have listed it for sale, but if it doesn't sell soon, we will no longer meet the "2 of 5 yrs" rule that allows complete exception of capital gains tax.
Is the tax that we owe pro-rated if we go over the 2 of 5 rule? Or does this go from not-owing the tax to owing 100% of the tax?
I've read IRS 523, but it's super confusing. If I moved for work 2.5 yrs ago, do I qualify for a partial exception?
(This is driving me nuts because I will likely net +$160k on the sale)
