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Any improvements made to your personal home are included in the basis at the time of sale. If you bought for $250K and added various improvements over the years for $50K, then you basis becomes $300K. In this manner you pay fewer gains. If, during the time it was a rental, you made improvements, then those would have had to have been depreciated during the year of improvement. You have to remember that you are treating this house as two different entities. One is the personal home, the other is a business (rental) property. There are different rules for each.
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