so for the $550k gain: The depreciation hits first: so the first $100k of accumulated depreciation is subject to "depreciation recapture" of $100k x 25% (lower of 25% or my tax rate) = $25k (max) tax. Which leaves $450k ($550k - $100k): so $450k x 4/10 or $180k is considered non-qualifying use and is subject to capital gains tax (so say 15%) or $180k x 15% = $27k capital gains tax. The remaining $450k x 6/10 or $270k is considered qualifying use and is eligible for the $500k home sale exclusion (meaning: no taxes on this $270k) .... so bottom line: $25k + $27k = $52k in taxes due to the $550k gain on the sale of my home, correct?
For completeness: I originally stated that I had a carryover loss of $10k. Since I no longer rent out my house, this $10k is basically "lost"... it can't be used to write-off anything (because I have a residual loss with no rental income), correct? These numbers are hypothetical but what matters most is ensuring that the process/understanding is correct 🙂
I appreciate the help so far!! You all are imparting knowledge which I appreciate greatly!
3) So given what I have learned: If I move out of the house and rent it for 3 more years starting 2030, then I meet all of the home tests and would qualify for the full $500k home exclusion (the non-qualifying / qualifying years don't enter into the home exclusion equation with this scenario) ... but I will still owe the "depreciation recapture" with 3 more years of depreciation accumulated
