“If we sell this property in the near future will we still have to pay property gains because we rented it for the 4 months?”---->you can't avoid tax. You'll have to pay tax on the depreciation that you would have taken while the property was a rental. That you can't avoid.Since you owns rental property, you can use the depreciation of the property to offset taxable income. In doing so, you lower your basis in the property so that when the property is sold, your gain is computed based on the selling price minus your purchase price and all depreciation that you previously claimed. Suppose you're selling a rental property that you bought five years ago for $500,000.Add the depreciation expense that you claimed each year for the property. Suppose you claimed $20,000 in depreciation expense each year for five years, for a total of $100,000 in depreciation expense claimed on the property. Then you need to subtract the total depreciation expense claimed from the original purchase price of the property to determine your adjusted cost basis. In this example, your adjusted cost basis is $500,000 - $100,000 = $400,000.You also should subtract the adjusted cost basis of the property from the property's selling price to determine your total gain. If you sell the rental property for $550,000, your total gain is $550,000 - $400,000 = $150,000.You need to subtract the total depreciation expense calculated from the total gain to compute your capital gain (as opposed to your depreciation recapture gain). In this example, your capital gain on the property is $150,000 - $100,000 = $50,000. Your depreciation recapture gain is $100,000. You should multiply your capital gain by the capital gains tax rate and your depreciation recapture gain by your ordinary income tax rate to determine your total tax liability. If the capital gains rate is 15 percent(as long as your marginal tax rate is 25% or higher than 25%) and your ordinary income tax rate is 25 percent, the total amount of tax you owe on the sale of your property equals (20 percent times $50,000) + (25 percent times $100,000) = $30,000. After 2012, the long-term capital gains tax rate will be 20% (10% for taxpayers in the 15% tax bracket).As, capital gains tax can be a significant burden when selling an investment property. One way of reducing or eliminating your capital gains tax liability is by converting the investment property into a primary residence in order to qualify for the primary residence exclusion of $250,000 for individuals or $500,000 for couples filing jointly. Live in the converted property for a continuous period of two years. To qualify for the exemption, you also must not have already used the exemption during the past two years.