As you know, your "2 of last 5" can be extended to a maximum of "2 of last 15". But to call it an extension is actually incorrect. What it is, is a "suspension" of the 5-year count. say you lived in the property for let's say, 2 yaers and then vacated the property under military orders and were gone for 5 years. During that 5 years you rented it out.
Then you sold the property 5 or more years of it being a rental. For the sole purpose of the capital gains tax exclusion, that 5 years "doesn't exist", because they were suspended. So they don't get counted. For tax purposes and to qualify for the "2 of last 5" capital gains tax exemption, treat it "as if" you sold it within 3 years after you vacated it. You'll be fine, because you have military orders to back you up. Besides, you've already indicated on your tax return that you were military for all these years.
