Refi, sell, or do nothing?

[Aimee Lawrence]

I have a property in Fort Collins, CO that is cashing flowing but my tax guy and my mortgage guy are telling me to sell. I would qualify for the primary residence tax break because we lived in the home 2 of the last 5 years. So I would potentially be walking away with 120-150k and pay NO taxes. Here are the deets:

Owe: 162k

Worth: approx 320k

Interest rate is 3.75% currently

Mortgage: $998

Rent: $1500 but would like go up this summer

HOA: $40 a month

Full disclosure, I love this townhouse. I am very attached to it and this is certainly impacting my decision. My options are to sell and weight for a downturn, refi and lose cash flow and my interest rate but again have cash for next property, or do nothing. The reasons that I love it are it's location, is has a front and back yard, attached on one side only, backs up to green space, low HOA, and it's a ranch. I can see us moving back there to retire when it's paid off. But I know this is a once in a lifetime opportunity to make a lot of money without paying taxes. Thoughts?