Capital gains on real estate sale - Buying in same year? (Bronx)

[Michael M.]

I was offered quite a bit above market price (around 300K more than it's worth in the current market) on my 2 family property by a developer that is looking to knock it down as part of a larger project on my block due to the zoning rights and proximity to the project.  

Question 1:

If I sell and buy another property in my neighborhood asap, are there ways to avoid capital gains taxes?  My accountant said that since my current residence is a multi-family, I would be exempt up to 500K on only my own unit, and would have to pay taxes on the rented portion, but he is based in Jersey and has made mistakes in the past...  He also mentioned a 1031 exchange in which I would keep the profit in escrow, but said it was a costly process.

Question 2:

How valuable are R7-1 zoning rights?  Are they only this valuable when there is a project nearby, or can I always get more for my house because of zoning rights?

I'm trying to convince myself not to sell, but I think it would be crazy to turn down a free 300K that I could invest in more/better properties in the same area.

Thanks!

[Frank Adams]

I'd find another accountant who is more familiar with the 1031 process. Mainly because of the comment about it being "very expensive". The last 1031 I did was in 2001, selling a California house with a 23 year rental history and buying 3 Texas houses. One we rented for 2 1/2 years before we moved into it as a retirement home. The other two we flipped the same day we signed purchase agreements on. IIRC the cost of the 1031 was between $500-$700. Not expensive at all for a $300K sale which would have had an adjusted basis of less than $20K!