Is it really worth taking the 500k gain tax free?

[intangible]

I was trying to analyze this recently and here’s the thread with my opinion in case you missed it.

Primary Home Tax Free Gain - To take or Not is the question

@Jil - Thanks for the corrections. Very useful. I have updated the scenario based on your feedback. Question: When a married couple is ready to move on from the primary home (CA property) and have the means to buy another primary home plus maintain a rental (CA property), what’s the best approach - (a) convert primary to rental, or (b) sell primary to reap tax-free gain and buy equivalent rental Assumptions for this analysis: All txns happen in CA (BA area) Annual income = 200k-250k (BA standard) Initial Purchase Price in 2011 = $500k Current loan balance on old primary = $350k 100% appreciation in 6 yrs from 2011 to 2017 Since a new primary is being bought in both scenarios so there is no impact of sale price, down payment and RE txn cost for the new primary on this analysis. Enough cash reserves exist for downpayment for new primary purchase without needing gains from sale of existing primary Rental property will eventually be liquidated in 10-30yrs timeframe BA RE appreciatio…

@BAGB

I believe the same logic applies to 1031 exchange. But 1031 exchange might mean that you have a much better cash flow or other factors.

One difference will be that in case of 1031 exchange, entire profit is tax deferred.

If you keep your rentals forever, do your heirs inherit your low cap gains tax base and property taxes?