@mack12345 wrote:
Opus 17 You've provided many answers/support /facts that have been very helpful. I'm a little anxious to do my own taxes during year of home sale. It was a rental for 3 years before my 2 years occupancy. Do you offer forms filing assistance through the platform or externally provide tax services? Thank you
I don't do private tax work. If you feel you need confirmation you are doing the right thing you can upgrade to Turbotax Live to get an expert review. Or you can upgrade to Full Service.
The prior rental raises new issues. The rental period is non-qualified for the capital gains exclusion. (This is not well-described in current IRS instructions, but Turbotax will perform the calculation correctly.) Also, you have to repay any depreciation you claimed or could have claimed during the rental period.
The first part of your capital gains attributable to depreciation is taxed as ordinary income with a max rate of 25%. 3/5 of the rest of the gain is non-qualified and not eligible for the exclusion so it is taxed as a long term capital gain at a reduced rate, and 2/5 of the gain is qualified and eligible for the exclusion. You can exclude up to $250,000 of the qualified gain, and if your qualified gain is more than $250,000, your spouse can exclude a partial amount if you moved for one of the safe harbor reasons. If your qualified gain is more than your exclusion, that will also be a long term capital gain.
