Can my capital gains tax be deferred?

Q: Capital gains tax: I sold my house 3 family house in Chelsea it had 2 floors rental income, my flat was second floor where I lived at. Sold it for 375,bought a piece of land in Peabody, 2 floor brown stone. for over 250, carrying a 75,000 morg. This is my first time selling property can the property gains tax be deferred? Or what is my alternative for tax? —Linda, Peabody

The following answer was provided by Mark Misselbeck, CPA, Levine Katz Nannis & Solomon PC, Needham.

A: You will need to break the sale into 2 pieces - the sale of the 1/3 you owned and occupied as your principal residence and the 2/3 that were a rental property. Provided you lived in the 1/3 as your principal residence for 2 years out of the last 5 and owned it for some 2 years out of the last 5, you may exclude up to $ 250,000 of profit from the sale from your income ($ 500,000, for married, filing a joint return). The sale of the rental property is reportable on Form 4797, page 2. Having concluded the sale and received the cash, it is too late to arrange for a deferral of the taxes on any gain from the sale of the rental property portion.