Hello,
I am planning on selling my house this year, 2025. I am single. My house has been my primary residence since December 2014. Starting in 2016 and ending in 2019, I rented out 2-3 bedrooms inside the house. In those tax years, I took a total of $5,907 worth of depreciation on my Schedule E for those rental bedrooms. I am estimating that I will have a gain of $165,000 on the sale of the property (well under the $250,000 exclusion limit). My understanding is that when I sell the property, the depreciation recapture rules means that I will have to recognize a gain of $5,907 that is fully taxable. Is that correct? If so, how is that reported (which form does it go on)? And is that gain taxed at the same rate as my normal income, or is it considered a long-term capital gain? Thanks!
