Since the houses were not used at the same time as your "principal residence" like a summer home and a winter home, you get to choose the property to use the exclusion on. However, if you use it on the rental property you must recapture the depreciation before the exclusion is applied.
example
sell $700
cost $500
depreciation $100
gain is $300
however, the the $100 of depreciation doesn't qualify for the exclusion so you will pay tax on that. the remaining $200 qualifies.
