How to defer/avoid capital gains tax on sold rental property

[Pankaj Kumar]

Hello All. I am new to the forum. Looking for guidance in relation to the sale of my rental property. I became an accidental landlord 3 years ago. I went to work for a company 3.5 years ago and bought a new construction at that time. Before I could move in, I ended up leaving that company and moving back to my earlier employer with in six months.  In all the chaos, I ended up keeping the house and renting it out for last 3 years. I didn't get to live in the house for even one day. Well, the time arrived this year for me when I have to sell this house. So, I currently have accepted the offer but I am concerned that it is going to cost me significantly in taxes. Bought the property for $570K and after realtor commissions and relevant fees, I expect to get $700K. Bunch of it will go away paying for remainder of the mortgage. Rounding for the sake of simplicity to $130K profit, what strategies could I employ to defer/avoid/minimize capital gains tax. I don't want to invest all the money back into another rental property as I need some part of it and that means I can't benefit from section 1031 exchange. I am not an accredited investor either to get to invest in opportunity zone funds. I expect to be in 15% tax bracket for this capital gain which means it will be a fairly hefty tax. Lastly, I do understand that taxes are part of life, and everyone should pay their fair share, but at the same time, I also believe that I am going to be the only one taking care of my own pocket. Thanks for everyone's help in advance!