When you sale a house that was both your residence and a rental during the time owned, can you actually qualify for full exclusion? What about the 1031 exchange, can you really EXCHANGE INTO YOUR DREAM HOME? Maybe I am a little tired or naïve, but I am pretty sure the non qualified states clearly-mixed use and what that really means is taxable gain on some of that transaction. Someone sometime has to pay the deferred taxes on the gain, and if you rent out your entire home 1046 days out 2927 days of ownership, you will get a partial exclusion not  full one.