You may be able to exclude all or part of the gain on your
home, if it was your principal residence, and if you meet the ownership and use
tests.
For most taxpayers, they must have owned the home for at
least 2 of the 5 years prior to selling it, and have lived in the property as
their main home for at least 2 years.
If you served on qualified official extended
duty as a member of the Armed Forces, you can choose to suspend
that 5 year period for up to 10 years, which may enable you to meet the 2 year
use test.
You can only suspend the 5 year period for one home at a
time, and you can only exclude the gain on the sale of a main home once every 2
years.
For a rental property that used to be your personal
residence, you still would be subject to income tax to the extent that you
claimed or could have claimed depreciation on the property for the years that
it was a rental. This is known as “depreciation recapture,” and is handled in
the Rental section of Turbo Tax.
Please see the following links for more information and examples:
https://www.irs.gov/publications/p3/ar02.html#en_US_2014_publink1000176229
https://www.irs.gov/pub/irs-pdf/p523.pdf
https://www.irs.gov/uac/Highlights:--Military-Family-Tax-Relief-Act
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