2 Year Rule for Capital Gains on Rental Prop

[Mark Samuals]

I purchased a property in California several years ago and lived in it as my primary residence for around 3 years. It is currently rented out and I am thinking about selling next year when my tenants lease is up. When the lease ends, it will have been about 35.5 months since I moved out and converted it to a rental. If I can get a quick sale I'll avoid the capitals gain tax, but that may not happen. Do I need to move back in until the property sells to ensure that I maintain it as my primary residence for 2 out of the 5 years up until the date of sale? Is there any leeway in terms of having the home on the market (and not used as either a rental or primary residence) when calculating the 2-of-5 years for the capital gains exemption? Thanks.

[Paul M.]

According to this post: http://www.biggerpockets.com/forums/51/topics/70981-turning-personal-residence-into-rental-property

the proration doesn't apply to when you live in it then rent it out afterwards, then it is just the 2 out of last five year test, but it does apply if you rent it out then live in it.