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SD1
Level 2

Sold Primary Residence With Home Office That Wasn't Used in 2 Years

Hello - I purchased my primary residence in 2016. From 2016 - 2019, I claimed the home office deduction. In 2019, the business folded and I haven't had any business use or home office in the property since then.

 

I am looking to sell the property this year. When I file my 2021 taxes, am I still responsible for the capital gains tax on the portion of the property I claimed as a home office? Or is it invalid since it is no longer an "active" home office?

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2 Replies

Sold Primary Residence With Home Office That Wasn't Used in 2 Years

the depreciation you took or should have taken for the home office is taxable as section 1250 recapture. any remaining gain is eligible for the home sale exclusion.

 

Hal_Al
Level 15

Sold Primary Residence With Home Office That Wasn't Used in 2 Years

Yes, you still have to pay tax on the depreciation recapture.   Depreciation recapture is taxed at your marginal rate, but not more than 25% .

 

In TurboTax, enter as a home sale.  You will be asked about depreciation previously taken.  It's a simple entry.

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