@Tony21 wrote:
I am in the same situation. I am trying to understand what depreciation is and how this will affect me when I sell the house in the future. The information above clear some of my questions and if I understand right, I can take advance now and deduct the depreciation of my house while this one is rented or not do anything (not take advantage of this) . No matter what I chose I will have to deal with depreciation when I sell the house, right?
The part I don't fully understand is how exactly is going to affect me when I sell the house. For example, if I rent my house for 3 years, then move back and live it (make it my primary house) for 2 years before I decide I want to sell it, what the impact will be when I sell it?Am i going to pay taxes for the depreciation?
You pretty much need to take depreciation.
Yes, when you sell the home you will pay tax on the gain due to depreciation
Be aware that just because you move back into the home for 2 years does NOT mean you can exclude the entire gain. In addition to the tax on the depreciation, you will only be able to exclude PART of the profit that you make. That is because you used it as your Principal Residence AFTER it was rented. That trigger the rules that you can only exclude PART of your profit.
