Deductions & credits

What you entered on your 2014 tax return does not matter.  It will not affect the fact that you lived in this home for 2 full years.

However, it seems like you said this home (sold August 26, 2016) has not always been your main home.  If that is the case, you can not use the full $250,000/$500,000 exclusion.  Your 'excluded' gain will be prorated based on the number of days it was NOT your Principal Residence after 2008, and the total number of ownership days.

For example, let's say you owned exactly 10 years (3652 days), and it was NOT your main home from January 1, 2009 to August 14, 2014 (2417 days).  That means you will pay capital gains on 66.18% (2417 divided by 3652) of the 'regular' gain, plus tax on any depreciation that you may have taken.

When you enter this into TurboTax, be sure to read the screens very carefully, as they can be difficult to understand.


View solution in original post