If you're trading 8% cash-on-cash for 10% cash-on-cash I guarantee you'll blow that 2% marginal gain in travel costs.That said, those costs do get easier with scale. 

no capital gains?

This is for half of a duplex.Asking price: $75,000Offer: $75,000 (Yes, I offered what they were asking because there was a lot of competition and their asking price was way under market value)ARV: ~$110,000Down payment: $15,000Rehab: $5,000Closing Costs: $2,000Total out of pocket: $22,000Rent: $1,000Total monthly income: $1,000Expenses:Mortgage: $313 ($60k @ 4.75%)Taxes: $100Insurance: $80Flood ins: $0HOA: $0Maintenance: $100 (10%)Capex: $100 (10%)Management: 0$ (I will self-manage)Vacancy Allowance: $50 (5%)Total Expenses: $749NOI = income - expenses = $1,000 - $749 = $251/month cash flow.Wealth gain = ARV - mortgage balance - down payment - rehab - closing costs = $110k - $60k - $15k - $5k - $2k = $28,000CoC = 13.7%So, to me this seems like a really good deal and I'm worried I'm missing something because it almost seems too good to be true.

When considering our options for our next house, I thought we would be able to defer the taxes from the gains when we go to sell it however because it’s our primary residence, it’s not allowed.

., they force coverage on you instead of tailoring the coverages around your unique situation)Only represent one insurance company (no single insurance company can offer the right policy, at the right price for all situations)Their process for getting a quote is difficult and cumbersomeTheir underwriters/inspectors seem to always find a problem with a propertyIf you spot these warning signs, you should search for an insurance agent with these attributes: Have a depth of knowledge gained through years of experience working with real estate investors like yourselfHave a unique consultation process specifically crafted for working with REIsHave access to a minimum of 50 insurance companiesWork with a large independent insurance agency or group (the larger the agency, the more leverage they have with insurance premiums and claim settlements).

The goal for me would be to gain as much experience as possible in this scenario. 

I suspect selling now would be the best choice, given the market and lack of capital gains (under threshold).Not sure how to calculate this easily – I've tried using the BP rental property calculator, but my numbers are all off since we've already lived in the house 8 years.

Use time that you have wisely to gain new insights and skills.

With doing this, down the road we will need to pay a capital gain if we ever sell.

What I lack, but am striving to gain, is the financial wisdom on how to structure the deal, so that's it's a good deal for all involved.