Confused about capital gains exemption

[Susannah Bonn]

Do you pay capital gains taxes when you sell in a house that you lived in for two years and then rented out for three?  It fits the 2/5 year rule but not sure whether it fits the "primary residence" part.  Does the rule assume you'll rent it for the other portion of the 5 years or that you'll leave it vacant in order to call it your "primary residence"?  Thank you!

[Ashish Acharya]

@Susannah Bonn, I think I know what you are asking. 

You do not have to leave your home vacant to qualify for the exclusion. You can rent it out when you are not living in the house. Also, you stay do not have to stay one block of time. Out of five years, you can live for one year, rent for next year, again live for one year, and rent for 2 more years.  

IRS uses  Fact and Circumstances  to determine if the house is your main home. Here are few criteria to judge if your house is your Primary residence when you lived on it. 

The house is your main home if:

1) the address is listed as your postal service address,voters card, on your tax return, or licenses

2) the home is near your work or near any organization where you are involved, where you bank, residence or one of more of your family member. 

Any advice contained in this post is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this document.