Depreciation recapture on rented bedroom

[meade18]

Hello,

I am planning on selling my house this year, 2025. I am single. My house has been my primary residence since December 2014. Starting in 2016 and ending in 2019, I rented out 2-3 bedrooms inside the house. In those tax years, I took a total of $5,907 worth of depreciation on my Schedule E for those rental bedrooms. I am estimating that I will have a gain of $165,000 on the sale of the property (well under the $250,000 exclusion limit). My understanding is that when I sell the property, the depreciation recapture rules means that I will have to recognize a gain of $5,907 that is fully taxable. Is that correct? If so, how is that reported (which form does it go on)? And is that gain taxed at the same rate as my normal income, or is it considered a long-term capital gain? Thanks!

[Bsch4477]

See if this helps. 

https://turbotax.intuit.com/tax-tips/rental-property/depreciation-recapture-definition-calculation-a...

[Mike9241]

the depreciation recapture will be taxable as section 1250 gain. it's a long-term capital gain as reported on schedule D but of a special type that does not get the same tax treatment of other LTCG. you may pay up to 25% in federal taxes on it. generally, the rate will be the lower of 25% or your marginal tax bracket. you would use the home sale worksheet which will allow for both the recapture and the home sale exclusion.