why do i need to even put in improvements if the exclusion should be $500k?
Because you are required by law to depreciate property improvements the same as the property. I would expect a CPA to know that without even giving it a 2nd thought.
I do not understand why
Because you are required to pay taxes on the recaptured deprecation *no* *matter* *what*. That includes depreciation recaptured on any and all property improvements.
If you did not take depreciation, then you are still required to recapture the depreication you *should* have taken, and pay taxes on it.
The taxation of recaptured depreciation is not included in the exclusion, and you will pay taxes on it with no exceptions.
