Rent depreciation, recapture and taxes upon selling.

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Topic Author
Roly
Posts: 59
Joined: Fri Jun 26, 2020 9:32 am

Rent depreciation, recapture and taxes upon selling.

Post by Roly »

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
Last edited by Roly on Fri Dec 24, 2021 5:48 am, edited 2 times in total.
Lou354
Posts: 789
Joined: Sun Apr 03, 2016 10:51 pm

Re: Rent part of my one-family home; depreciation, recapture and taxes upon selling.

Post by Lou354 »

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.
clydewolf
Posts: 783
Joined: Tue Jul 21, 2015 12:51 pm

Re: Rent part of my one-family home; depreciation, recapture and taxes upon selling.

Post by clydewolf »

See IRS Pub 523, Selling your home: https://www.irs.gov/pub/irs-pdf/p523.pdf
Topic Author
Roly
Posts: 59
Joined: Fri Jun 26, 2020 9:32 am

Re: Rent part of my one-family home; depreciation, recapture and taxes upon selling.

Post by Roly »

Thank you for those responses. I just saw, not sure why I did not get notified.
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