Hi,
I'm stuck trying to work out a depreciation recapture issue that's affecting my tax planning. I sold my house this year at a gain below the gain exclusion limit. Before the sell, I rented out a spare bedroom & depreciated it each year. From my reading of Pub. 523 & completion of the worksheets, I land at:
"Your entire gain is excludible from your income and you have no gain to report on your tax return. The Reporting Your Home Sale' section does not apply to you." Problem is I know I'm going to get a 1099-S since I had used the property for rental and therefore will have to report the home sale. Since I don't seem to fit cleanly into the p523 flows (all gain excludible but still having to report the sale), I'm trying to understand if I'll be subject to depreciation recapture. Or to put it another way, is depreciation recapture mandatory on a house sale with gain less than the gain exclusion maximum?
Thanks!
Cody
