Tax Implications of Sale of Multi-Family (Primary Residence?)

[Patrick Hartnett]

I made my first real estate investment roughly 5 years ago, purchasing a 2-Family as my primary residence...living in 1st Floor Unit with my wife and we renting out the 2nd Floor Unit to tenants.

We're about to sell the house at a profit and I'm looking to understand what the tax implications will be.

I'd read that a married couple are allowed to exclude up to $500,000 in profit from a sale of their "primary residence".  However, I'm not sure if my multi-family can be considered a primary residence?

Or would I need to consider a 1031 Exchange to defer taxes?

I'm of the opinion that the housing market is bound to crash again in the near future, and would love to have cash on hand to take advantage of future opportunities so I might forego the 1031 Exchange anyway...but looking for any guidance anyone can provide!  Thanks