My wife and I are semi-retired and have 3 children under 18. The capital gains rules confuse me (and are pretty depressing). Our reasons for selling the 1 house are to pay for a boat which we plan to live aboard. I have questions which I believe are better answered from my simple example:

I have a rental property in CO that I paid $100k for 10 years ago. I plan to sell it in 2018 for $270k (with $80k remaining on mortgage). My primary residence is in Oregon. We make around $30k a year (after deductions). This income comes 100% from rentals in CO, OR and AZ. I've used a few online calculators which seem to put us at around $16k in Fed gains tax and $24k in OR gains tax on a total gain of $170k. So, my take-home will be more like $130k minus any depreciation I have to pay back. Does this all sound reasonable / expected?

I'm not certain online calculators are getting the multi-state factor. Do I actually owe OR capitol gains since the property is not located there? Since I make under $50k married filing jointly, wouldn't I pay no capitol gains at all or is that only true for the first $20k (30k personal income, so 20k tax free?) This all seems insane to me, like I'm missing some huge factor to avoid such a massive tax bill. No, we did not live in the house we are planning to sell at all in the last 5 years. Perhaps borrowing against the house for the boat is a better plan... yikes.

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