My question is, do I qualify as having lived in the house for this time, to get around the 2 out of 5 years capital gains tax rule?

Your real life returns will be slashed due to - higher vacancy rates, high maintenance and repair costs, non payment of rent, eviction filings.Here are some good cardinal rules I follow:1.

There are rules to follow!

There are some areas in Ormond and some in Daytona, but you need to make sure you follow the rules, or they will come after you. 

Technically they aren't breaking any rules as long as they're not specifically promoting themselves.

The technical options are easy to learn, some from books, some from talking with attorneys since they are basically rules you need to follow.  

Hey Magda, as accountants on BiggerPockets, we're not allowed to self-promote (that's against the forum rules).

A real estate professional can use real estate losses to offset W-2 or other income, but you would need to meet both the:1.750-hour rule – You must spend at least 750 hours per year in real estate activities.2.50% rule – More than 50% of your working time must be spent on real estate.Since both of you have W-2 jobs, it might be difficult to meet these requirements unless one of you dedicates significant time to real estate.Another option could be buying multiple rental properties.

In my experience, keeping things simple and straightforward with sellers works best.

Assuming you meet California code and a few other rules, granny flats can always be placed in a backyard in California.