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Tax due to appreciation when renting out primary residence
Hi bigger pockets community. I've been living in my house for about 5 years and now plan to move to a different location. I plan to rent out the house i'm living in right now. I may hold it for a few years because location economy is in expansion.
There is about 100k appreciation in the past 5 years and I know I don't have to pay for the tax if I sell the house now. However, I learned that if I convert this one to rental house, the cost basis has to be the purchase price instead of the market price at this moment. which means if I convert the house this year and sell it in a few years, the 100k appreciation happened when I was using it as primary residence is taxable. 1031 is an option but what if I need the sales proceeds for other purpose? Does 2 out of 5 years rule apply here? in other words if I sell in 3 years all the appreciation since 5 years ago are not taxable?
I appreciate any suggestions. Thank you very much.