We sold a house 9/2017 that my wife owned and lived in from 2001 until 11/2014 and then rented the home from 5/2015 until 7/2017. Does the home qualify for exclusion?

Assuming the closing date was 9/1/2017, she must have lived in the house as her primary residence for at least two years of the last 5 years she owned the house, counting back from the closing date on the closing statement received at the closing. So if that date was 9/1/2017 the house must have been her primary residence for at least 2 years starting from 9/1/2012.

So if she moved out on 11/1/2014, the period from 9/1/2012 to 11/2/2014 is more than two years. So she would qualify for the $250K capital gains tax exclusion.

Note that the IRS words this requirement as "24 of the last 60 months you owned it". The 24 months do not have to be consecutive either. Converted to days and taking into account there's a leap year in there, if she lived in the house for at least 731 days of the last 1826 days she owned it, then she qualifies for the exclusion. For the day count, the date of the sale closing does not count.

Oh also, if this house was still classified as residential rental real estate at the time of the closing, then the sale is reported in the Rental & Royalty Income (SCH E) section. When asked if this sale includes the sale of your primary residence, you should select YES so the program will know to check if you qualify for the exclusion. If you select NO, then the exclusion will not be applied to your gain.