I'm still confused. I'm mostly focused on two parts as part of entering the home sale (after showing it converting to personal use)...1) adjusting the cost basis for my primary home sale and 2) accumulated depreciation recapture. If the cost basis is adjusted then it increases the gain (which in our case is beyond the threshold for capital gains exclusion) so that adds to the taxable gains. In addition, Turbo Tax has us report the accumulated depreciation for deprecation recapture (which is also taxed as a separate item from what I can tell).
I recognize we're benefitting from the home sale exclusion, but it seems the depreciation portion is taxed twice by reducing the cost base (thereby increasing the gain) and also being recaptured. Is it right that it would be handled that way?
