Would you rent or sell this property?

[Michelle C.]

I have an investment property in Santa Rosa, CA that I bought in 2009. Loan on the property is for 112k, comps support that it's worth 355k. I did live in it, but it's been a rental for over 3 years and I'm outside the primary residence window. My yearly income is zero because of deprecation and I don't have income outside the property, but the capital gains are going to throw me into the higher tax bracket. It's possible I could qualify for a partial exemption as we did rent it because we moved out of state for a job relocation, but no CPA can give me any clear cut answers to whether or not the IRS would accept a safe harbor moving exemption after 3 years. I'm not interested in doing a 1031 exchange. It pulls significant positive cash flow as a rental, but we're probably near the top of the market in terms of appreciation. Should I sell it and pay the capital gains or keep using it as a lucrative rental? I don't want to reinvest in other real estate at this time, but I would likely reinvest in stocks or other investments. Opinions? What would you do?