Maximizing capital gains tax exclusion on sale of my house

I am considering selling my house and downsizing to a rental or perhaps buying something else. My house was purchased in 1992, and has appreciated a great deal. I met with a CPA and I may owe upwards of $200k in taxes when I sell. I'm single and bought out my ex's equity 5 years ago. I was hoping that the fair market value that we agreed on in our mediation would be my basis, but alas, I was mistaken. As a single person, I can exclude $250k from the proceeds from tax. My CPA estimated a taxable gain of $683k. I can't be the only person in the Bay Area to face this. I read on a blog a potential tactic of making my adult son a part owner in order to exclude another $250k. I need this money for my retirement. I'd love to hear from anyone else who's gone through something like this. If you used a tax attorney or a real estate attorney to advise you, I'd love a referral!

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I have EXACTLY the same problem. And it's unfair since people who move a lot can use the $250K deduction multiple times. There should not be a penalty of hundreds of thousands of dollars just because you stayed in one house and didn't move. There should be a lifetime gains exclusion or ability for seniors to exclude more on a one-time basis. This situation contributes to our housing shortage too, since it prevents people from downsizing. They'd rather die poor and alone in these huge houses than pay capital gains so their heirs can inherit the full value. Looking forward to any answers.

I am in your exact situation. Real estate wealthy, with a sale making you cash poor. If you find an answer please share.
Only way out I know of is to do a 1031 exchange into a property which will give you a monthly income. You don't have enough value so you would have to partner with someone else.
Robert Burss, who was a real estate professional said you could sell your house in installments to spread the tax liability and allows you to sell you house at a for a higher prices. You find a buyer who wants your home and is willing to take actual ownership in say 5 years. In the five years you are given installment payments of say $100K. Sale price of the house is determined in 5 years. This allows you to get a higher price for the sale of your house.  And if the buy faults, you have the house plus the money the buyer has paid you.
Real estate professionals will try and talk you out of this because they would rather receive a commission check today for selling your house instead of have to wait 5 years.  What they are not realizing is they would get even more money if they wait.  Bruss has passed but his books and newspaper columns are on the web.  Read up on how to do this and see if it works for you.  The great thing about this is you will have buyers "fighting" to buy your property as they don't have to come-up with a large down payment all at once.  They get to spread it out over several years. I have not done this, but is is something I am looking into doing very soon. 

If you sell, yes you will have to pay capital gains tax. Also a transfer tax. And the real estate agent's fee. Plus the cost to fix up the house and move into a hotel room while it is being sold. So you will lose a percentage in the sale. There are other ways to get money for your retirement out of the house. You could rent out a room or two. A little hard during a pandemic, but doable. Or you could get a reverse mortgage. You also may want to look into installment sales and monetized installment sales. I think you could also marry someone and get $500,000 exclusion. I hope you find a way to retire comfortably. 

Several of my neighbors have created an in-law unit in their houses, usually in the basement, and live in it while renting out the remainder of the house. They avoid paying the capital gains tax, retain their very low property tax, stay in the same community, and best of all create an income stream for their retirement years, while living virtually rent free.