Given the market conditions and your hard money loan, it might be wise to first calculate your monthly holding costs, including loan payments, taxes, and maintenance.

It is how it is recognized, taxed and falls heavy on the VOE. 

If you decide to sell and find an investment property with a greater cash flow potential.A 1031 exchange would allow you to indefinitely all of the tax and use it to your advantage to reinvest into larger nicer property/properties.

It is my understanding that the new owner will have the house at the cost basis of my purchase price, for calculating capital gains taxes or depreciation.For gift tax purposes for you - FMV.For capital gain tax purposes for the recipient - your original basis/purchase price 

Some factors to consider are appreciation and tax strategies.

There will be no assessment for increase in taxes or insurance so remains at $1935.

Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable).

I have a followup question - I will realize a lot of capital gain from this home in Idaho, so I think unless I purchase a new primary residence I will have to pay that capital gains tax. 

@Anita Z.I recommend finding an accountant who specializes in real estate taxation, tax planning and financial planning.

This is tax free.