We purchased a condo unit in 1986 for use as a rental. We converted it to our primary home in 2016 and plan to sell it later in 2018 (after we have lived in it at least 730 days).
I have read Pub 523 extensively, but have a question on "How to Figure Your Gain or Loss Worksheet" (pg. 7), Line 5b:
Does "Any depreciation you took (or could have taken)" include ALL rental depreciation from 1986-2015 or only depreciation after May 6, 1997?
(I understand that the depreciation recapture on Schedule D only includes depreciation after May 6, 1997)
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If you have had the rental since 1986 then the entire home must have been fully depreciated by now ... review the depreciation worksheet to confirm this ... then you will enter in the total depreciation taken for the entire property + and improvements or additions. All the depreciation must be recaptured as ordinary income then the profit in excess of the depreciation will be considered capital gain.
If you have had the rental since 1986 then the entire home must have been fully depreciated by now ... review the depreciation worksheet to confirm this ... then you will enter in the total depreciation taken for the entire property + and improvements or additions. All the depreciation must be recaptured as ordinary income then the profit in excess of the depreciation will be considered capital gain.
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