Capital gains exemptions for a property which was rented

[coolasacucumber]

Hi

I purchased a property in December 2010 and used as a primary residence for ~8.5 years (until early July 2019). Then I rented the property from late July 2019 to March 2021 (1 year and 7 months of rental). Then I renovated the rental property and put it on the market for sale & rent a few months back. I received an offer and hoping to close in the next week or two.  I fulfill the requirement that I lived for at least 2 years in the last 5 years. Am I eligible for the capital gains tax exemption as I rented out the property for almost 2 years.  Your guidance is highly appreciated. 

Thanks! 

[Critter-3 · Accepted solution]

Yes if you qualify for the 2 out of 5 year exclusion you can use it HOWEVER the depreciation that you were required to take must be recaptured as ordinary income ... that part is not excluded.   If you did not take the required depreciation then RUN to a local tax pro to get this error corrected. 

[coolasacucumber]

Great! Thank you very much for your quick response! Yes, I did claim the depreciation.