1099-S Rented portion (room) of property

[pavidus4]

I am selling my condo after living in it continuously as my primary residence for 29 months. I rented out one of the bedrooms and reported the rental income on Schedule E. Do I still qualify for the capital gains exclusion, or will the portion of my property that was rented be subject to capital gains?

[Mike9241 · Accepted solution]

when part of the home used for rental is within the same dwelling unit as the residential part of the home. you treat the entire home as a principal residence for the home sale exclusion rules. however, you must recognize gain (section 1250) to the extent of depreciation allowed or allowable (what you should have taken).  if you didn't take depreciation, see a pro to help resolve this tax issue.  

[Carl]

Yes, you still qualify for the exclusion. However, you will still pay taxes on the recaptured depreciation no  matter what. The depreciation recapture is never excluded from the taxable gain that may be subject to taxation.