rental to primary residence

[Joe Bell]

so i own  two houses one that i have rented for 15 years and one that has been my primary residence for 7 years. i want to move into the rental property to claim the $500,000 (I'm married) exclusion over 2 years. my question is will i get the max exclusion if i do this or will it be pro rated down. i have seen tons of discussions say you always get the max exclusion and some say it is pro rated based only on how long you actually lived in the house. which is correct?

maybe  @Linda Weygant  knows or someone with experience.  

i have a second follow up question which i will post after this one has been clearly answered.

[Linda Weygant]

What you're talking about is the exclusion of the sale of your primary residence from capital gains taxes.

Moving into one of your rentals for 2 years before selling it is a common strategy for doing exactly as you're proposing and yes, it does work.  Converting a rental to primary for two years will definitely satisfy the 2 of the last 5 years requirement.

What many people frequently forget is the depreciation recapture.  Basically, all the depreciation you took from when it was a rental will be converted to Ordinary Income in the year title transfers.