I have a client that lived in their principal residence for 22 months then moved out of state for a new job. Instead of selling the home, they rented the home for 3 years and sold it. They have a $30,000 gain on the sale, and $36,000 in depreciation claimed. I know they cannot exclude the depreciation.
Can they exclude the $30,000 gain using the Principal Residence Exclusion due to moving for a new job or would they have had to sell it right when they moved? They were two months short of living there for 2 of the last 5 years exclusion.