Deprecation recapture renatl property

[landlord14]

I purchased a home in 2005 as my primary residence. I purchased another home in 2010 as my primary residence and rented out the first home until 2016. I sold my second home and moved back into the original home purchased 2005 and used it again as my primary residence. I lived in the 2005 residence for more that 24 month (declared it as my primary home) then sold it and purchased yet another home. When reporting the sale (2005 home)  I used "Sale of Home" and stated I lived in it more the 24 months. Any gains were deferred.  No problems there. My question is how do I report the depreciation for recapture from the home when it was a rental (the one purchased 2005) . I think I do that via "sale of business property" but not sure? Any other forms needed to report deprecation? Thx

[AmeliesUncle]

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@landlord14 wrote:

 stated I lived in it more the 24 months. Any gains were deferred.  No problems there.

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Actually, that IS a problem.  There SHOULD be a gain because you used it as your Principal Residence AFTER it was rented.  You need to go back and re-read the screens carefully.

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@landlord14 wrote:

My question is how do I report the depreciation for recapture from the home when it was a rental (the one purchased 2005) . I think I do that via "sale of business property" but not sure?

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You need to only enter the sale ONCE.  If you do it in the "Sale of Business Property" section, it won't walk you through the Principal Residence Exclusion.

When you enter it in the "Sale of Home" section, is there a question about using the home for a rental or Home Office?  I think it should be there.  If so, that should let you enter the previous depreciation there.  If not, I don't think the step-by-step interview is set up for that situation.

[landlord14]

Ok thanks I do see the questions about primary residence for at least 24 months. Also has a field to put in deprecation. The final gain is related to adjusted cost basis including improvements minus depreciation and such so my guess is if you declare the deprecation in the home sale guidance as asked you cover what the IRS requires. I did also have 1099-s issued when sold so it think I'm in compliance as far as reporting.

[AmeliesUncle]

Just saying 24 months is NOT the correct way.  There SHOULD be a question asking if it was ever NOT your Principal Residence.  In your case, PART of your profit should be taxable (plus gain due to the depreciation).

In a nutshell, if you owned the home for 14 years and it was NOT your Principal Residence for 6 year, you are NOT allowed to exclude 6/14ths of the gain, and that 6/14ths of the profit will be taxable (plus the gain due to depreciation).  The actual calculation uses days, so you NEED to find that area in the "Sale of Home" section where it specifically asks for the number of days you owned it, and the number of days it was not your Principal Residence (after 2008).  Again, these rules apply because you used it as your Principal Residence AFTER it was rented.

[landlord14]

Yes I remember being asked about the number of days it was not the principle residence. And yes the deprecation was entered . Thanks for your insight.