Thank you all @AmeliesUncle @Carl @Anonymous_ for your input and discussion. The situation regarding our case is much clearer to me now.
If I may summarize the key points that enable us to have the prorated maximum reduction:
- Circumstance change (job relocation) happens when I used it as our primary residence, and as such, converting it to rental property does not disqualify us.
- Distance safe harbor supersedes the requirement of time approximation between circumstance change & sale, which we will certainly qualify due to international relocation.
Consequently, as this property was owned and used as primary residence by me and my wife for approximately a year in the last 5 years, we are entitled to have roughly half the combined maximum exclusion, i.e., ~ 250K.
Thanks again for all the help!
*Unfortunately I was locked out of original account and cannot find my password, so can't vote any of the answers as adopted.*
