Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
You can exclude the gain, but you will have to recapture any depreciation taken
So, to the extent that your gain can be attributed to depreciation taken, you will recognize a gain
But, for the most part it is excluded
so what ever decpreciation i took on my taxes (4k for last year) for 2 years, which was offset by my rental gains is what need to be recaputered as gain and taxed?
Yes that is correct
is that at the 15%, my agi for last year was 125,849.00 , married, filling jointly
No, recapture is at 25%
Is there anything else you need assistance with?
If not, please rate my response "excellent" so that I may receive credit for assisting you today
no way to aviod this?
No, there is not
excellent, you, not the situation