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How did you like the idea of avoiding some of the taxes by selling house along with some of the property to allow for a tax defferal of up to $500,000?

If you and your spouse own and live in the house for the next two years, then yes, you can exclude (not defer) up to $500K of capital gain on the sale of the house and a reasonable amount of land surrounding it. I'm no expert here, but I'm almost certain I've read that if you sell a house and a large piece of land, you divide the sale up into two pieces: a big chunk of land (on which capital gains will be due in full) and a modest chunk of land around the house (which would qualify for the $500K exclusion). And no, I don't know what modest means - maybe an acre or two? But didn't you say, in the original post, that you wanted to keep the house?

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