Personal to Rental tax implications

[Jason Hill]

My wife and I are about to buy a house in another state to be our primary residence. I'll be moving there immediately however; my wife has to finish her graduate degree and will be moving down in May. That works out nicely as we will have lived in our current house 2 years as of Feb '12.

I plan on turning our current house into a rental, but, a plan B is always nice. If we decide to sell it at some point, I know that if we lived in it 2 of the last 5 years we don't get hit with capital gains. The problem is that I will be moving out before the 2 years. Our only saving grace is that my wife is on the mortgage as well.

My Question: With all the above in consideration if we sell within the time limits, will we be hit with capital gains?

[Steven Hamilton II]

My first question is why are you moving? That can help determine a partial exemption for you. My second is is your gain over 250k? If it is not, then it is irrelevant anyway if you move out as long as your wife spends the 2 of 5.