What tax consequences do I face when selling a rental?

I currently have 2 single family homes which I have been renting (and reporting as such to the IRS) for the last 8 years. I understand the gain from the sale is counted as regular income and I hear that I must also add back the depreciation amts. claimed. Are all depreciation $ from past years counted as regular income as well? Is the gain computed from the amt the home was worth at the time it was put into rental service or the amount paid for the home (since I lived in it for 4 years prior to renting out)?
Is there any way to lower the tax burden since it will not be a like kind transaction, although the funds will be used to buy a vacation home which could possibly be rented out in off season?

First of all, the gain from the sale will not be ordinary income (or regular as you called it). The gain will be taxed at two rates: Part one is the gain up to the amount of depreciation you have taken, this will be taxed at a max rate of 25%. Part two is the gain that exceeds the depreciation taken, this will taxed as a capital gain with a max rate of 15%.

The gain will be computed from the amount you originally paid, plus any improvements to the property, minus the depreciation

Example: Original cost $100,000
Landscaping 1,000
Depreciation - 5,000
Basis 96,000

Selling price $120,000
Gain (120-96) 24,000

Tax rates: max of 25% on $5,000 of depreciation recaptured
max of 15% on $19,000 (capital gain amount)

The way you phrase your question indicates you have very little knowledge in the area of taxes. THerefore, I would suggest you have a professional prepare your tax return since it will include Form 4797 which is quite complicated.

I am not sure, but I believe can still do a tax free exchange for a vacation home and avoid all taxes at this time (known as a Section 1031 Exchange). You will want to contact a CPA with a good working knowledge of Section 1031 Exchanges before you sell your rental property.

This is very important! The Section 1031 must be structured properly before you sell! Contact a CPA and use a "Qualified 3rd Party Intermediary" to do the paperwork and property transfer. This is very inexpensive to do properly and you can save a lot on taxes.

To answer all your questions in full I'd be typing all day.
I suggest you go to a tax specialist as there are many ways around the taxes you speak of. The cost of the tax person will be more than covered with the savings they can offer you.

been there / done that

The best advise that I can give you is, "don't listen to any of us". You are very likely dealing with a great deal of money. Get an opinion from a tax professional familiar with 1031 exchanges and the sale of rentals.