The Roll-Forward

The same sale, done as a 1031 instead: what the bill would have been, what rolls forward, and what you can buy with the money that did not go to tax. Where the property was also your home, section 121 runs first — it erases up to $250k/$500k of appreciation outright, and it never covers the depreciation gain; the 1031 picks up exactly that part. That order is the IRS’s, not ours.