pk
Level 15
Level 15

Deductions & credits

adding to CRitter#2's reply above, the recapture is only from the profit i.e. that portion of the capital gain that is due to accumulated depreciation, is treated as ordinary income  and then the rest of gain is taxed under capital gain regime applicable to the taxpayer. Also the five year rule that still exists is the look-back period from the date of sale for qualifying the "prime residence" status of the home sale.