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Level 1
posted Jan 28, 2020 2:01:13 PM

Do I owe taxes on a property i bought in 2010 for personal use. Rented out starting 9/1/2017 and sold on 8/20/2019?

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1 Best answer
Expert Alumni
Jan 28, 2020 2:18:04 PM

Yes. Even though you potentially qualify for the exclusion, you will still need to recapture the depreciation you have taken. If you did not depreciate the property, you will need to go back and amend to take it. The IRS requires you to recapture it whether you took it or not.

 

The tax code recognizes the importance of home ownership by providing certain tax breaks when you sell your home. To qualify for these breaks, your home must meet the Eligibility Test .

 

How your sale qualifies.   Your sale qualifies for exclusion of $250,000 gain ($500,000 if married filing jointly) if all of the following requirements are met.

  • You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale.
  • You didn’t acquire the home through a like-kind exchange (also known as a 1031 exchange), during the past 5 years.
  • You didn’t claim any exclusion for the sale of a home that occurred during a 2-year period ending on the date of the sale of the home, the gain from which you now want to exclude.

1 Replies
Expert Alumni
Jan 28, 2020 2:18:04 PM

Yes. Even though you potentially qualify for the exclusion, you will still need to recapture the depreciation you have taken. If you did not depreciate the property, you will need to go back and amend to take it. The IRS requires you to recapture it whether you took it or not.

 

The tax code recognizes the importance of home ownership by providing certain tax breaks when you sell your home. To qualify for these breaks, your home must meet the Eligibility Test .

 

How your sale qualifies.   Your sale qualifies for exclusion of $250,000 gain ($500,000 if married filing jointly) if all of the following requirements are met.

  • You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale.
  • You didn’t acquire the home through a like-kind exchange (also known as a 1031 exchange), during the past 5 years.
  • You didn’t claim any exclusion for the sale of a home that occurred during a 2-year period ending on the date of the sale of the home, the gain from which you now want to exclude.