gain from sale of rental property

What is the name of your state? New York

I owned & lived in a condo for 5 years, got married & purchased a new home which we have lived in for the past 3 years. I kept the condo as a rental property because the RE market was sluggish 3 yrs ago. Now the market is great (yeah!) and I can sell it and make $40,000 profit. I want to use that $40,00 as a down payment on a vacation property or a second home. Can this type of transaction defer my capital gain if say I "rent out" the vacation property for more than 2 weeks per year or make my vacation property another investment property? What is the best way to avoid the capital gain (besides moving back in it for 2 years to re-establish it as a primary residence)?
Any other suggestions would be helpful and appreciated!

If you sell it right now, you'll still qualify under the 2/5 year rule. 3 years after you moved out, you no longer qualify & would have to move back in for a few months to requalify under the 2/5 eyar rule. You could then exclude the $40,000 gain. You will still have to recapture the depreciation allowed or allowable.

If you want to do a 1031 exchange, see an attorney. These are very complicated & require much i-dotting & t-crossing.