Can I really avoid capital gains tax with a self-directed IRA?

[Ronald Stanley]

Hey family,

I purchased a rental property in 2016 under my own name for $135,000. The home is now worth $225,000 and I plan to sell it in the next six months.

My plan is to use the profit to pay off the mortgage on my primary residence. I was advised that there are tax savings when selling a home that's owned by a self-directed IRA. Is it true that I can avoid or limit capital gains taxes? If so, how is this done? I have some money in a traditional 401(k) and My wife has a little bit of money in an old 401(k) from a company she no longer works for. We are thinking about rolling her funds into a self-directed IRA.  Is it too late to incur the tax savings since I bought the home in my name or is there a way that I can put the rental home into a self-directed IRA before I sell it? Any advice would be greatly appreciated. The rental home has a mortgage balance of $111,000 if that plays a role in your answer. I expect my capital gains taxes to be north of $30,000 from the sale but I'm not really sure how to calculate what it will end up being.