Hal_Al
Level 15

Investors & landlords

No. The depreciation recapture is not eligible for the  250000/500000 exclusion.
Because you got a tax deduction, for depreciation, while you were renting it; you have to "recapture" that deduction when you sell it. using the example, you will pay tax on $6000.  And you will pay that tax at ordinary income tax rates, not capital gains rate. But (again using the example); you will not pay tax on the $25,000 capital gain.