I purchased a property as primary residence in 2008, then received military orders for transfer in 2010, at which I converted to rental property. I had resided in it for more than 2 years.
I have retired Sep 21, after 20 years.
Actually, based on the way I'm counting IAW the IRS publication 523, you may not qualify for the full exclusion. Maybe just a partial exclusion. It depends on your closing date on the purchase, and the date you departed under PCS orders. It's important to understand that the IRS does not grant any period of "extension". It's a "suspension" of the day count. That day count can be suspended for a maximum of 10 years.
You need to have lived in the home as your primary residence for 730 days or more, of the last 1826 days you owned it, counting backwards from the closing date of the sale.
Since you don't state exact purchase or PCS departure dates above, I'm going to use the middle of each year, which is July 1st.
My logic, the 10 year suspension would have ended when I retired, and began 10 years prior [Sep 11-Sep21],
That logic is flawed. The 10 year suspension period ends 10 years from the date you moved out of the property under PCS orders, or on the date of retirement/separation from the military; whichever occurs first. For example, if you had retired in 2016, the day count would restart on your retirement date. In your case, using my assumed date of July 1st, the day count restarted 10 years later on July 1st, 2020 - not your retirement date in 2021.
Just want to clarify that so you can figure your day count correctly. I can't do it, since I don't know the closing date of your original purchase, or the date you departed, or the date you converted the property to a rental.
