topic How can we exclude cap gain of a primary home sale even when a portion of the living area (not a duplex) was rented out? IRS pub.523/pg 11says cap gain is excluded in Investors & landlords

How can we exclude cap gain of a primary home sale even when a portion of the living area (not a duplex) was rented out? IRS pub.523/pg 11says cap gain is excluded

suelee7070 — Wed, 17 Mar 2021 19:23:02 GMT

We can't find out how TurboTax will let us exclude the cap gain but still properly report the rental income/expenses for the rented portion of the living area. We read pub. 523/pg 11 and it specifically fits our situation for continuing to exclude cap gains despite having rented part of the property. Thank you.

Re: How can we exclude cap gain of a primary home sale even when a portion of the living area (not a duplex) was rented out? IRS pub.523/pg 11says cap gain is excluded

AmeliesUncle — Wed, 17 Mar 2021 22:39:37 GMT

You will still have capital gain based on the depreciation that you took.

Or is it taxing more than just the depreciation?

Re: How can we exclude cap gain of a primary home sale even when a portion of the living area (no...

ColeenD3 — Wed, 17 Mar 2021 22:26:00 GMT

The depreciation will be recaptured as ordinary income. You may have had a gain over the exclusion. Double-check your entries, as well.

Re: How can we exclude cap gain of a primary home sale even when a portion of the living area (not a duplex) was rented out? IRS pub.523/pg 11says cap gain is excluded

Carl — Wed, 17 Mar 2021 22:28:26 GMT

I assume you are referring only to the recaptured depreciation. Understand that the depreciation you are required to recapture and pay taxes on, is *not* excluded from capital gains, no matter what. There's just no exception for that. You *will* be taxes on the recaptured depreciation.