Is a partial rental property considered as principal residence which enjoys tax exclusion

Yes. If you sold this property for a profit and it was your primary residence for at least 2 of the last 5 years, you may qualify for the capital gains tax exclusion. Ordinarily, on a rental, you would need to recapture any depreciation allowed or allowable (regardless if you claimed it or not), as capital gains income, and pay taxes on that amount.

However, you shouldn't have depreciation for an asset (house) that you put in service and disposed of in the same year.

You will have to report it as a sale of rental property. You'll still get all of your exclusion.

Please feel free to post any additional details or questions in the comment section.

Thanks for your answer!  So you mean that I can still report depreciation if I didn't sell it in 2017? Is there any constraint on the depreciation percentage (business percentage) that affects the principle residence qualification?

Friendly ping

Somehow I assumed you sold it in 2017. Yes, you can take depreciation from the time place in service until date disposed of in a future year.
Is there any constraint on the depreciation percentage (business percentage) that affects the principle residence qualification?
Yes. Depreciation that you take while renting (even if you don't claim it) will be taxed as ordinary income. That's called recapture. If you claim 40% of the house as business property, you'll be claiming 40% of what would be the whole house depreciation. You'll still get the Sec 121 exclusion unless you rent it 100% and move out for 3 of the last 5 years of ownership.

Thank you so much for figure it out!

More than a pleasure. Good Luck!