Capital Gains tax on former residence

[Skai Bateman]

Thanks for any advice. I know tax laws are changing right now, so I am unsure how much of a burden capital gains tax is going to be in 2013.

We are planning to sell a downtown condo that we own, that was our residence until 2009. In 2009 we moved to a suburb and it became a rental property. Since 4 years will have passed from the time we moved, we no longer can claim that it has been our residence for 2 out of the past 5 years.

With the capital gains expected, i am concerned about getting hit with AMT on top of everything else, and the new medicare tax of 3.8% (if we have over $250K income).

Is there any strategy for avoiding the capital gains tax? (we're not interested in a 1031 exchange and we can't move back in due to family size and location. But our jobs have not changed.) Is 1 out of the past 5 years a proportional reduction in taxes?