capital gain tax on converted primary/rental confusion

[MaverickAl]

I have a question about capital gain tax and I am confused about 2 years of 5 years residency . this is my scenario:
- I purchased the house for $190k on 4/2011 as a primary resident.

-I lived in the same house till 7/31/2018 and it was converted to rental on 8/1/2018. the fair market value was 400K at the time of conversion.

-I sold the house on 6/30/2021 for $550k.

I understand if I lived for 2 years in the past 5 years, I should not file capital gain tax, but is this 2 years based on the date of sales, or is it based on tax year or based on sales date, I mean should I calculate my occupancy 5 years from sale date means 6/30/2016 or from  1/1/2016 or 1/1/2017?

[Mike9241]

the 5 years is for the period before sale

6/29/2016-6/29/2021

6/29/16 to 7/31/2018 is more than 2 years so you qualify for the exemption

you need to report the sale because you took or should have taken depreciation during the rental period. that must be recaptured before the home sale exclusion applies

the depreciation should have been based on the $190 K because that was less than the FMV on the date rental started. also, the depreciable basis should have been reduced by the value of the land.

if you have not dom this consult with a tax pro, since certain adjustments on reporting the sale need to be made including filling form 3115

[Carl]

should I calculate my occupancy 5 years from sale date means 6/30/2016 or from 1/1/2016 or 1/1/2017?

You count backwards from the closing date of the sale. In order to qualify for the exemption, you must have lived in the property for at least 730 days of the last 1,826 days you owned it, counting backwards from the closing date of the sale. Note that the closing date does not count as one of the days you lived in the property either. Also, the days you lived in the property as your primary residence do not have to be consecutive either, so long as at least 730 of those days fall within the last 1,826 days you owned it.