Hi
I have taken depreciation on basement part of the house some years and not other years I have been renting.
What happens when I sell the house?
a) Is depreciation recaptured for all the years I have been renting, regardless of whether I took it or not?
b) Is depreciation recaptured at the rate of income tax the year I sell?
c) What happens if I didn't rent one year?
d) Do I have to pay taxes on gains or do I qualify for exclusion?
e) Can I stop renting for 2 years before selling and change anything?
f) If basement part of my house is 100K and I take 5K depreciation the first year; do I take depreciation on 95K the following year?
Thank you all for your help.
Roly
Rent depreciation, recapture and taxes upon selling.
Rent depreciation, recapture and taxes upon selling.
Last edited by Roly on Fri Dec 24, 2021 5:48 am, edited 2 times in total.
Re: Rent part of my one-family home; depreciation, recapture and taxes upon selling.
Not a tax expert here but according to my understanding, in the year you sell the house there will be recapture of all depreciation expense you claimed or should have claimed over the years. The recaptured amount is taxable and is not subject to exclusion. There was no depreciation expense in the years you didn't rent out the basement apartment. I hope that's helpful.
Re: Rent part of my one-family home; depreciation, recapture and taxes upon selling.
See IRS Pub 523, Selling your home: https://www.irs.gov/pub/irs-pdf/p523.pdf
Re: Rent part of my one-family home; depreciation, recapture and taxes upon selling.
Thank you for those responses. I just saw, not sure why I did not get notified.