if you want to defer the gain consult with a real estate attorney. generally, you would have to rent out the house for 6 months to a year (that's where the attorney comes in so he can give advice on how long you may need to rent it) The IRS does not have to agree with the attorney. Assuming the rental is successful then you can do a 1031 exchange (talk to the attorney about this as part of deciding whether to bite the bullet or defer the gain thru the 1031 exchange. 1031 exchanges are costly. there are substantial fees involved. the attorney can give you an estimate. also, an attorney can make sure if you decide on a 1031 that all the i's are dotted. miss one and the exchange is no longer tax-deferred. i saw on taxpayer ask about doing a 1031 after he received the proceeds (directly) - he could not
