Is this Tax Exempt or not?

[Terry Hall]

I bought a house lived in it for 3 years, then rented it for 3 years, is it tax exempt? My CPA keeps using a complicated formula saying I owe a portion. Then I convinced him if it was my residence for last 2 of 5 years its tax exempt. But he says I will still have to pay in the depreciation that was used while a rental, correct??  Any help with sources to show please. Thanks

[Wayne Brooks]

Yes, you are exempt from cap gains IF you sold it Within 3 years of living there, and not a day more.  But Yes, you have to claim the depreciation taken and pay tax on that.....the exemption is only for cap gains.