I believe you meant to say "net investment tax" instead of "new investment tax." The net investment tax went into effect on 1/1/2013. The NIT applies at a rate of 3.8% to certain net investment income, including gain from the sale of a second home that is not a primary residence. Your accountant appears to be upbeat, but I do not know of anything being contemplated that will provide you with an exemption from this new tax -- and I hope your accountant turns out to be correct and that he is able to obtain relief for you. Had you been able to move back into the rental property for 2 years, you would have been able to avoid the NIT tax to the same extent you could have used the up-to-$250K exclusion on gain from the sale of a residence. However, that option no longer exists. Do understand that you were able to deduct depreciation against your ordinary income and the amount of that depreciation in excess of straight-line depreciation will be taxed at the 25% rate, with the rest of the gain being eligible for the now 20% rate (as opposed to the 15% rate in effect for 2012).