Primary Home to Rental - Sec 121 (with a twist) Question

[Sean P.]

Hi all - newbie and first time poster. I will soon be facing a scenario in which I'd appreciate the community's input. 

In 2015, my girlfriend and I purchased a condo in a hot neighborhood of Chicago. To get technical, my girlfriend (now wife) was the sole purchaser as I just graduated from law school so my salary history (or lack thereof) dinged us on rates. We have lived in the condo since purchase as our primary residence. Fast forward to today, we are shopping around for a larger home but wish to keep the above condo for ~25+ years as (i) I'm bullish on the neighborhood (as well as location within the neighborhood), (ii) the unit has a couple very unique characteristics which cannot be replicated, and (iii) I want to generally dip my toes into the investment property game and feel this is best opportunity to do so. I've ran the rental numbers and, after factoring in vacancy, capex and repairs, I believe I can net ~$200-400 CF/mo. Once downtown is back in full force from Covid, I see rental rates and home value increasing further. Of course, principal pay down and some tax perks to boot. 

Now comes the dilemma. Everything I've read regarding Sec 121 discusses the 2 of 5 year rule but never touches on the scenario of primary residence --> rental for 10+ years --> reestablishing as primary residence for 2+ years --> sell. I've read the code and have my thoughts but would rather hear from others who have actually dealt with the scenario and/or are confident with the analysis. My dream scenario is to rent for 25ish years, reno it, live in it as empty nesters for 2+ years, then sell without cap gains (up to $500k or the then applicable amount).

As a side note, I would keep the rental in my wife's name to keep the excellent interest rate. If the above does not work for some reason, I would explore selling to a newly formed S corp and at least netting the modest gain now. If anyone believes I can use the fact that the condo is in my wife's name only to my benefit (e.g. create newly formed LLC with myself as sole member or 50/50 member with wife), I am all ears. My gut reaction is that it would not meet the arm's length transaction requirement as we are married.

Thanks in advance and apologies for the long winded question.