Rental depreciation recapture

[drewleighton]

1) I purchased my home in 2007 and rented it from 2009 until 2012 when I re-occupied the house until 2020 when the house was sold.  It appears that the 3 years of rental are non-qualified, but the wording is vague to confirm whether this could be a "Temporary absence".   What are the rules for "Temporary Absence"?

2) I documented the depreciation on the Adjusted Basis of Home Sold Worksheet and my Refund dropped by $3000.  Then I added the same depreciation on the Home Sale Worksheet and the refund dropped by an additional $3000.  Is this right?  Maybe I am supposed to put in the depreciation in only one location?

[ColeenD3]

Yes, only take the depreciation once. Do not pre-adjust the basis in the Sale of Main home. You will be asked to enter it separately.

You lived in the home 2 out of 5 years before the date of sale. If you had time away during that time period, you need to determine if it was temporary, such as a vacation. The time does not have to be consecutive.

[Carl]

It appears that the 3 years of rental are non-qualified,

Yes, they are non-qualified use.

Here's further clarification. If you lived in the property as your primary residence for at least 730 days of the last 1826 days you owned it, then you qualify for the exclusion. Note the days you lived in it as your primary residence do not have to be consecutive, so long as all of those days occurred within the last 1826 days you owned it, counting back from the closing date of the sale.

Typically, if the owner is the last occupant of the property prior to the sale, the amount of the exclusion you are allowed may (or may not) be pro-rated based on the number of days of non-qualified use, after 2008.