During the rental period we did not deduct any depreciation expense.
Doesn't matter. When you sell the property you are required to recapture and pay tax on the higher of depreciation taken, or the depreciation you "should" have taken. Recaptured depreciation is "not" exempt from being taxed under the "2 of last 5" rule. You will pay taxes on that depreciation, no matter what.
Question, if we use the home as full-time personal residence for the next two years and thereafter sell it, do we get the full capital gain exclusion?
No. Since the owner (you) will be the last occupant to vacate the property prior to the sale, the rental period before you moved out is non-qualified use. Your tax exempt portion of your gain will be pro-rated accordingly.
