How Can I Sell A Home in San Diego Without Paying a Huge Tax Bill

[Lindsay West]

My aunt has a home in San Diego that she bought in 1987. Now, she's getting ready to retire and move to Florida. It's been her primary residence for more than two of the last five years, but it has also been an investment property for the last year and a half while she's been stationed overseas. She's looking at a significant tax bill when she sells the property. I know the first $250k is tax exempt on a primary residence. I've also talked to her about doing a 1031 exchange. But I was wondering if it's possible to use both of these strategies to mitigate the tax burden. Is this possible? Or does a property have to be either a primary residence or an investment property for tax purposes?