5/8/2009- Bought duplex for $167,000
8/8/2019- Sold duplex for $265,000
5/8/2009- 8/1/2010: 100% of duplex= rental
8/2/2010- 9/7/2016: 32% of duplex= rental; 68% of duplex= primary residence
9/11/2016- 8/8/2019: 100% of duplex= rental
68% of duplex was our primary residence for 2 of the last 5 years. Thus, 68% of duplex qualifies for section 121 exclusion.
When we first bought the home it was 100% investment property, so when I began depreciating the structure I entered the cost of the building as $141,000 and the cost of the land as $26,000 (Total= $167,000). (I have depreciated 100% when 100% rented; 32% when 32% rented.)
To obtain the 121 exclusion on 68% of the duplex: In Turbo Tax, I plan to treat the two units of the property as separate entities and put 68% as primary residence sale and 32% as business sale. However- when I enter 32% of my sale price in the ‘disposal of rental property’ section it shows a loss because the ‘original cost of building’ is the cost of 100% of the building (which I entered back in 2009 and have been depreciating since) whereas the amount ‘received for building’ is 32%. This is not apples to apples and thus the “loss” that is shown is inaccurate. How do I remedy this?
Can I simply change the ‘original cost of the building’ to 32%- even though my depreciation and amortization reports over the years have always shown the original cost as 100%?
