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In order to qualify for the $250,000 exemption on the sale of your house, this would have to have to be your primary residence. It would have to have been your primary residence for 2 of the past 5 years and per your facts you would not qualify. Therefore you would be taxed on the house as a long terms capital gain. You would need to calculate your basis (the amount you bought the house for minus any tax deductions you took for depreciation,etc. This can get complicated). Your gain would be the amount of sale minus your bases and it should be a long termine capital gain.
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