vacation rental

[binhanvo]

I rented part of primary house as short term rental for 2 years and then stopped renting for more than 2 years. Do I still need to recapture depreciation when I sell? Thanks.

[tagteam]

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@binhanvo wrote:

Do I still need to recapture depreciation when I sell?

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Yes, assuming your selling price (less expenses) is greater than your adjusted basis.

[binhanvo]

Thanks for reply.

I found a different answer on this website which says all depreciation and website will be forgotten after 2 years. Am I misunderstanding something ?

This is posted on yahoo finance web site:

How to Avoid Depreciation Tax on Rental Property

If it’s important to you to avoid the depreciation recapture tax, there are several strategies you may want to adopt.

• Take advantage of IRS Section 121 exclusion. This allows you to exclude up to $250,000 of the profits from the sale of your primary residence if you’re single and up to $500,000 if you’re married and filing jointly. If you live in your property for two out of the five years before you sell the property (and those years need not be consecutive), the property would be considered your primary residence. And all of those years of depreciation deductions would be forgotten.

[tagteam]

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@binhanvo wrote:

Am I misunderstanding something ?

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Yes. With respect to tax law and regulations, Google and Yahoo are not your friends; there is misinformation posted all over the internet.

Depreciation (Section 1250) recapture) will be excluded from the Section 121 calculation.