the five year window ( look-back period ) starts from the date of closing and as mentioned above during this window, one of you ( you or your spouse, if married at the time of sale ) must have owned the prop for two years continously and both must have used the prop as your main home for a total of 730 days , in order to qualify for exlcusion of $250,000 of capital gain for each spouse ( if married ). The portion of the capital gain that is due to depreciations allowed , mut be first allocated to ordinary income and taxed at your marginal rate.
