Q. If I buy a property, rent it for 1 year, and then move into it for 2 years, then sell it, would I still have to pay capital gain taxes?
A. Yes, but the gain would be prorated between home and rental tome. Basically, in your example, one third of the gain (plus depreciation recapture) would be taxable.
The fact that you bought the property with the proceeds of another rental property is irrelevant (unless a proper section 1031 exchange was used).
