ColeenD3
Expert Alumni

Investors & landlords

@al_li_2020

 

You said, "It seems to me TurboTax has divided the gain for selling  this home into a rental business portion and a main residence portion, and the sale of the rental business portion is still taxed as an investment gain"

 

Yes, the house is treated as two properties. It was both a rental and a personal home. Each usage is treated differently. For your personal use portion, you can potentially exclude gain if you qualify. For the rental usage portion, not only can you not exclude gain, you have to recapture the depreciation taken.