exclusion of gain is good but if you are just excluding $20,000 of gain, you may have been potentially been better off selling as the opportunity costs could have been higher.Best of luck!

Many people here are not from CA so it’s kind of not surprising it took this far down in the thread to get correct info.In CA if tenant has resided in property for one year or longer you cannot evict without just cause unless it’s a single family property(excluded) or owner lives on one side.

It depends in how much the property appreciated and how much you anticipate the market will appreciate in the future.Being able to exclude $250,000 of gain is great...but excluding only $50,000 of gain is much less appreciated; especially if it is taking away opportunity costs elsewhere.Furthermore, since you have a duplex, section 121 exclusion is applicable for only 1/2 the property.

Neither solution is particularly desirable, as both have undesirable income tax consequences.The sale of partnership interests are specifically excluded from tax-deferred exchange treatment under the rationale that a partnership interest is a personal property interest and not a real property interest, so more complicated structural solutions are required when partners desire to go their separate ways and some or all of the partners wish to structure and complete a 1031 Exchange."...

Though it could be argued that like the new house build, the demolition for conservation purposes was a value-add project that also resulted in a fundamental change in use (e.g. if one demolished one's house and plowed the fields of one's residence and sold it as a farm, the gain would presumably not be excluded even though nothing was added), and de-coupled the vacant land from its prior nature as a residence.

Though it could be argued that like the new house build, the demolition for conservation purposes was a value-add project that also resulted in a fundamental change in use (e.g. if one demolished one's house and plowed the fields of one's residential lot and sold it as a farm to the USDA or something, the gain would presumably not be excluded, even though nothing was added), and de-coupled the vacant land from its prior nature as a residence.

After *all* expenses, ROI on rent is 3.5% - this excludes any appreciation.A week later, I saw the SAME unit as mine, in the same complex - it was advertised for $50 more monthly rent than mine, so I feel secure in my rental rate being at market. 

IRS section 121 excludes any tax on the gain when selling your primary residence….but once you rent it out for 3 years, it no longer applies. 

And you want to exclude partiers.

Since this income source is a non-housing payment for unemployment you can exclude it for qualification.