We lived in a home from 2004 to 2013, when we purchased our current home. We kept and maintained (visiting almost daily, and my husband sometimes overnight due to work schedules) until 2016, when out daughter moved in. No rent was ever paid, and she and her new husband are now purchasing the house. We never used the property as a rental, so we never took any deductions, etc. from it (just a personal use property, and we have had a significant amount of personal property stored at the house, which will be moved when she officially purchases it). We will realize $50k gain from the original purchase in 2004 (so almost 18 years owning). Will this all be capital gains since we have lived in our current home 5 years, or is there some qualification that will exclude some portion of this from CG? I've read about section 201(b)(4)(c)(ii) where it looks like we could possibly qualify for 4/9 of the 500K exclusion (having lived in it as our primary residence from 2009-2013, but all the examples regarding this section were on rental properties reconverted to a primary residence, so I cannot really tell.
See the exclusion rules below. The pending sale would have to be within the 5 year time frame.