If a house has been owner-occupied by a married couple filing jointly but 1/3 of the house has been rented, do the couple qualify for the $500K capital gains sale tax exclusion?

However, you should be careful with how soon you move into the property after completing the exchange; otherwise, you risk invalidating the exchange.A 1031 is deferring the taxes - not eliminating them (putting aside proper estate planning and you holding the property until you die).Accurately working through these types of scenarios can be tricky because of all the moving parts - ie, recapturing depreciation, adjusting the cost basis, whether you owned the property prior to 2009, etc.However, if we generalize this and ignore the tricky parts for the time being, you could have this scenario play out like this:- buy property A in 2010 for $500k- sell property A in 2020 for $1M and exchange into property B (deferring $500k of profit)- rent property B for 1 yr and then move into it as primary residence- sell property B for $1.5M in 2030 (another $500k of profit)To figure out your taxes, you'd be looking at:- a total of $1M in capital gains ($500k from sale of prop A and $500k from sale of prop B)- you owned props A and B for a total of 20 yrs - 9 of which were as your primary residence (45%)- this limits your potential primary residence exclusion to $450k ($1M x .45)- since you're married filing jointly, you can exclude the entire $450k (but not the max of $500k)- the remaining $550k would be treated as long term cap gainsAgain, this is very generalized and not meant to be an accurate calculation, but hopefully gives you an idea of how the numbers might work out.Best advice any of us can give you here = consult with your tax professional :)Good luck,- Brian

@Ben SwinYou'd be messing with you 121 exclusion by renting then moving in. 

It gives the potential buyer the exclusive "right", but not "obligation",  to buy the property within the agreed upon term set forth in the Option Agreement. 

Zillow does in fact scour the MLS for additional properties that are posted exclusively there much like that of Redfin.  

@Alina Trigub Well, consider that the fund can continue to operate and grow until 2047, which is the last year that they can sell and still get tax exclusion. 

The Air Defense Artillery School moved from El Paso to Fort Sill (this was covered in multiple newspapers, so shouldn't be considered sensitive information).

Realtor.com and Zillow actually get their information from the MLS (unless its an exclusive, or FSBO listing). 

And you could rent it for 3 more years and still be able to sell and take the primary residence exclusion. 

And yes, you will lose some of the deduction, proportionately, the longer you rent it out.Unless you're an experienced landlord, and the house needs reconditioning anyway (so you'll do it after the tenants leave), and you can somehow do without the primary residence tax exclusion, SELL IT!