Sorta as @Patrick M. said,  it only excludes owner occupied under 4U.  

If not, you can exclude a gain only on the 1/4 of the gain(assuming each unit is same).

@Harry Williams One thing to keep in mind... when you pull your DOM, are you excluding dated properties and non-rehabbed homes?

Gain is Sales price less selling expenses less adjusted basis.Talk to a CPA to confirm your gain and to see if there is anyway to defer or exclude the gain from your tax return.Best of luck

., that you are aware of delineate "activities" included/excluded?

or 80 (my rents minus operating expenses, but excluding principal payments)?.

Doing so will exclude lost rent in case of a loss.Any input to what others do for their rentals is appreciated.

Your theory that higher income will self-exclude more marginal applicants is correct.Personally, I don't want "frugal but good" tenants.

Hi @Danielle Wolter -I see this same situation in the SF Bay Area all the time ... here's the process that I would use to help think through this:Since I don't know your exact situation, I'll make up some numbers that may or may not be close to what you're dealing with ... my guess, though, is that they'll be in the ballpark:- let's say you bought for $500k ... the PI on your loan might be around $2100/mo- condo in downtown SD ... you might have a $450/mo HOA fee- prop tax ... in the range of $525/mo- insurance ... maybe another $75/mo- sub total: $3150/mo (and I'm excluding repairs, prop mgmt, etc)- potential rent: $2400/mo- cash flow: -$750/mo ... -$9k/yrYou're looking for appreciation, so let's say you hold the property for the next 10 years ... you could be $90k in the hole from negative cash flow at that point (I know that's unrealistic, but this is just an example :). 

If you experienced appreciation while it was your primary residence, be sure to consider the loss of the section 121 gain exclusion on the sale of a primary residence...250k/500k gains excluded from tax for single/married on the sale of a primary residence...goes away if you hold as a rental longer than three years.