I have lived in my primary residence for 5 years and sold the home in fall of 2022. During those year my wife used a very small office for her business? How do I file ?

[vadik99]

We sold the home for a gain since we purchased 5-6 years ago. We don’t plan to buy a home but travel instead. Will I be penalized for not buying another home with gains tax?

[MinhT1]

If you have lived in your home for at least two years in the last 5 years, you have a capital gain exclusion of $500,000 (for MFJ) or $250,000 (Single or MFS).

There is no penalty for not buying a new home.

Please read this TurboTax Help article for more information.

If your wife claimed a home office deduction using the regular method, the allowable depreciation has to be recaptured and taxed at a maximum rate of 25% (whether or not the depreciation had been deducted or not)

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[Ultry135]

I’m trying to understand the dollar amount possibly I have to pay this year.  We made about 100k on our home since we purchased 6 years ago. Is the 25% tax based on these gains? 


If so it doesn’t make sense taking a home office deduction to lose this much with a sale of a primary home. Or do we still fall under the allowable gains of 500k when we sold our primary home. 

[MarilynG1]

Look at Form 4562 for the last year you claimed a Home Office Deduction for the Prior Depreciation and Current Year Depreciation and add those amounts together. 

In the Home Sale section, enter this amount when TurboTax asks for it, after you indicated that you had a Home Office. 

Your 100K profit on the home sale will be excluded, but you will have a taxable Gain of the Depreciation amount which can be up to 20% for a Long Term Capital Gain (depending on your income).

Look at the Home Sale Worksheet, Line 30 in FORMS mode to see the calculations.

You are correct that taxpayers should keep in mind the recapture of Home Office Depreciation when selling their home. 

@Ultry135 

[Ultry135]

Thank you for your quick reply. 

i found my 2021 taxes and see Form 4562. The 2021 depreciation amount listed is a lot higher than we claimed based on the last two years (2020-2021) 

both “depreciation taken on home” and “depreciation taken for AMT” are required for the sale of home sections im not sure how to calculate both. 

i was hoping TurboTax would calculate since I used it for the last few years. 

[ShirlynW]

Yes, TurboTax does calculate deprecation taken on a home and "deprecation taken for AMT." Both would be found on Form 4562.

For more information

[Ultry135]

Hello. Can someone point out what lines on form 4562 I need to use to determine the “depreciation” and “AMT depreciation” ?

the current taxes I’m filing are asking for those without giving more info. 

I understand it’s on form 4562 but which lines?
some irs  articles I read have you multiplying and dividing to get to these two numbers. 

[CatinaT1]

When selling a home, you need to determine the amount of depreciation taken or allowed for your home office over the years. This amount must be recaptured. There are two methods to use when deducting Business Use of Home for a home office. You will need to determine which you used so you can find the numbers you need.

If you don't know off the top of your head which method you used, you can check by reviewing your Schedule C forms. The line numbers may have changed over the years, but you will be looking for Expenses for Business Use of Your Home (line 30 in 2021). This line will tell you if you took the simplified method or regular method.

If you took the simplified method in any year, then that year is easy--no depreciation was taken for the home office.

However, if you find that you used the regular method, the next thing to do is look for Form 8829 (Expenses for Business Use of Your Home) for each year you had the home office. The line numbers may have changed over the years, but you will be looking for Depreciation allowable (line 42 in 2021). Once you get that number for each year, add them up, and that will be the amount of depreciation deductions you took. 

You might find a Depreciation and Amortization Report as part of your 2021 return worksheets if you have used the home office for multiple years.  This might have a cumulative number of all depreciation taken over the years. TurboTax has not always offered this report with all versions, so you may or may not have this report.

[Ultry135]

It appears we filed the simplified method.

In schedule C the deduction was $1125 for both 2020 & 2021.

2022 is $938. 

2019 was net loss so I don’t see the amount. It’s blank. 
Form 8829 line 42 is blank because we used the simplified method? 
do I add those up to get my “depreciation”. How is “AMT depreciation” calculated or is it left blank under sale of home? 

Thank you in advance!

[MaryK4]

Because you used the simplified home office deduction, you do not have to recapture any depreciation- it is a lowered amount that does not apply depreciation.  The Home Office can only be claimed up to net business income so any years with a loss there was no deduction.  @Ultry135 

[Ultry135]

Since I used the simplified method I am to enter “0” in the “depreciation” and  “AMT depreciation” under the sale of home? 

[AliciaP1]

Yes, you should enter 0 if you used the simplified method to take the home office deduction.

@Ultry135 

[Jsungirl]

I have a similar question. I am entering the depreciation for my home office deduction and have found the amounts on form 8829 (thank you!) and in turbo tax there are two fields in "Depreciation after May 6, 1997" to enter the depreciation amount:

"Depreciation after May 6, 1997" and "AMT Depreciation after May 6, 1997"

Do you enter the total depreciation amount in both fields? Or just one?

Thanks for your help in advance!

[DaveF1006]

You may enter the total depreciation amount in both fields.

[Jsungirl]

Thank you! appreciate the quick response!