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The depreciation will lower the "basis", so your gain (profit) will be increased due to the depreciation.
If you used the home as your principal residence for at least 2 of the last 5 years and did not exclude the gain on another home in the last 2 years, you can "exclude" (not pay tax on) up to $250,000 ($500,000 if filing as Married Filing Jointly) of the gain.
However, the $250,000/$500,000 exclusion does NOT eliminate Section 1250 gain from depreciation AFTER May 6, 1997. In other words, if your total excludible gain is under $250,000/$500,00, you will pay tax ('recapture') on the depreciation from May 7th, 1997 through 2008. You would not pay tax on the depreciation from 1986 to May 6th, 1997.
That applies ONLY to your unit. If you sell the entire building, you can not use the $250,000/$500,000 on the other units. That only applies to your unit that was used as your "principal residence" for at least 2 of the last 5 years. All of the depreciation ("Unrecaptured Section 1250 Gain") from the other units will be taxed, usually at 25%.
The taxable gain from the sale may affect other things on your tax return. For example, the higher income may reduce or eliminate some deductions and credits, and you may be subject to the 3.8% Net Investment Income Tax.
The depreciation will lower the "basis", so your gain (profit) will be increased due to the depreciation.
If you used the home as your principal residence for at least 2 of the last 5 years and did not exclude the gain on another home in the last 2 years, you can "exclude" (not pay tax on) up to $250,000 ($500,000 if filing as Married Filing Jointly) of the gain.
However, the $250,000/$500,000 exclusion does NOT eliminate Section 1250 gain from depreciation AFTER May 6, 1997. In other words, if your total excludible gain is under $250,000/$500,00, you will pay tax ('recapture') on the depreciation from May 7th, 1997 through 2008. You would not pay tax on the depreciation from 1986 to May 6th, 1997.
That applies ONLY to your unit. If you sell the entire building, you can not use the $250,000/$500,000 on the other units. That only applies to your unit that was used as your "principal residence" for at least 2 of the last 5 years. All of the depreciation ("Unrecaptured Section 1250 Gain") from the other units will be taxed, usually at 25%.
The taxable gain from the sale may affect other things on your tax return. For example, the higher income may reduce or eliminate some deductions and credits, and you may be subject to the 3.8% Net Investment Income Tax.
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