Why does sale of rental show a gain when sold for less than I paid? Lived in as home and when put in rental value was less.

[Coleen3 · Accepted solution]

When you rent your home, you have depreciation calculated for the entire time it is a rental property. Whether you take it as an expense each year or not, that amount is recaptured at the time of sale and reduces your basis. If your cost was $200,000 and you have $30,000 of depreciation, your basis is $170,000.