Investments and primary residences are not treated the same.Several people have shared the rules regarding a primary residence for federal tax purposes.If this was your home for 2 of the past 5 years, you are allowed $250k cap gain exemption as you are single.Your income level is irrelevant. 

We basically just tried to treat people as we expected to be treated if we were renting somewhere else.

I'd add for common mistakes is treat it like a business. 

Would you possibly like let me treat you to dinner and pick your brain?  

-- learn all the definitions of the words they use, learn how they think, how they talk to people they are negotiating deals with, how they treat people they work with, how they recognize a good deal -- and start practicing all of that with people you know, and meet!   

And the QI can treat it like a simultaneous exchange for each party and provide all the papering necessary to satisfy 1031 regs. 

It wasn't that someone was being soft, they just weren't treating their rentals like a business.

It's not a cash cow and it doesn't meet the 2% rule but it is easy to maintain with pleasant tenants who pay on time and treat the place with respect.

While there is some inherent "sale" from one or two that have and develop the idea it is treated different.

I send him all the details about what I spend and let him sort out exactly how things get treated.