If you have a capital gain from the sale of your home, you may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse.
n general, to qualify for the exclusion, you must meet both the ownership test and the use test. You're eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale.
Based on the information in your question, you would qualify for the exclusion and wouldn't have a taxable capital gain. If you used your house as a rental, you will have to pay depreciation recapture on the amount of depreciation you took, or were entitled to take. If you took (or were entitled to take) 1 years depreciation and the cost basis of your house is $100,000, your depreciation would be $3,636. Assuming you had a gain on the sale, you would have $3,636 of income taxed at 25%, or $909.
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