So when I report the sale of the home through TurboTax, it is saying that I have to pay capital gains on part of the gain of the sale. I’m guessing because it was rented for 2 years. Is this correct? I just thought that if I lived in the home for at least two years then that excluded all capital gain tax on the sale.
You can exclude all of the gain (up to the $250,000/$500,000 limit) except for the depreciation. If it is taxing more than that, go back through the questions and read them very carefully.
Thanks for you help! One last question just to simplify it for myself and ensure I am doing this correctly. When I enter the information on the sale and everything, it has an amount (gain) for “Sale of Business Property” and also an amount (gain) for “Sale of Home”. Should it have both? It is including the home itself as a business asset and it asks if I sold this asset. Not sure if I am supposed to check that box or not. From what I understand that’s what determines the gain of the sale of a business property or not. Again, thank you for all of your help!!
It probably should only show up once. But those summary screens can be confusing and misleading.
Did you only enter the sale ONCE? If so, you should be good. Be sure to look at the tax forms (such as Form 4797 and Form 8949 to make sure the sale is only reported once.