Depreciation recapture on 1M worth of rental property could very easily bump one up into the AMT realm of paying 15% on gains + full fed income taxes on recaptured + state on the whole ball of wax.

Option 3 is now out as well. When converting back from rental to owner occupied, you must live there a full 5 yrs to get the write off. 2 of the most recent 5 only goes for owner occupied converted to rental.

The big question is what is your cost base on the properties?? If you depreciated little/none, I would eat the 24%.

If you depreciated enough to qualify you for AMT then your only real option is to 1031 or hold. Depreciation recapture is normal income and you will give 50% back to uncle sam in that case… that party is BYOV (bring your own vaseline)!