Sorry, I want to make sure I really understand this. In the previous simplified scenario:
"Let's say you bought the home for $300,000, took $100,000 of depreciation, and sold it for $500,000.
Your total gain is $300,000 (Sales Price of $500,000 minus your Adjusted Basis of $200,000). OF that $300,000 gain, $100,000 is Unrecaptured 1250 Gain (tax due to the depreciation), and the other $200,000 is taxed as long-term capital gain."
If I rented the property previously and then lived in it the last 2 year before selling, I wouldn't have to pay the capital gains on the $200,000. If I had $0 income the year I sold the house, I would have to pay 0% of the $100,000 depreciation too? I know that's unlikely so lets say it was a retired person and they only made $24,000 a year from social security, the tax that you would have to pay back on the depreciation would be whatever the tax bracket is for $24,000/year (12%)?
