The answer is:
The timer for when ownership starts is based on the date the sale is recorded to me with the county. This means if I want to avoid capital gains I need to "own" the property for 2 years after we record the sale/transfer to me with the county.
The 2 years of ownership and 2 years of residence (within the 5 years preceding the sale) do not have to be the same 2 years.
This can get very complicated. You might want to read up on all the rules in IRS Publication 523, Selling Your Home, which you can download from the following link.
https://www.irs.gov/pub/irs-pdf/p523.pdf
