We are selling a home in California that was our primary residence for 12 years; we have been renting out the home for the last 2 years, since we had to relocate to Massachusetts.
We lived in the house for 2 of the last 5 years, so we should qualify for the $500k exemption on capital gains. But because it was a rental for the last 2 years, how much of the sale of the home would qualify for the $500k capital gains exemption for joint filers?
And how would the rest of the gains be taxed, seeing as how the property is in California but we are in Massachusetts?
