Sold Primary Residence With Home Office That Wasn't Used in 2 Years

SD1 · ‎July 22, 2021

Hello - I purchased my primary residence in 2016. From 2016 - 2019, I claimed the home office deduction. In 2019, the business folded and I haven't had any business use or home office in the property since then.

I am looking to sell the property this year. When I file my 2021 taxes, am I still responsible for the capital gains tax on the portion of the property I claimed as a home office? Or is it invalid since it is no longer an "active" home office?

Mike9241 · ‎July 23, 2021

the depreciation you took or should have taken for the home office is taxable as section 1250 recapture. any remaining gain is eligible for the home sale exclusion.

Hal_Al · ‎July 23, 2021

Yes, you still have to pay tax on the depreciation recapture. Depreciation recapture is taxed at your marginal rate, but not more than 25% .

In TurboTax, enter as a home sale. You will be asked about depreciation previously taken. It's a simple entry.

Sold Primary Residence With Home Office That Wasn't Used in 2 Years

Investors & landlords

Investors & landlords