Question about selling second home and taxes

[tax_user_sb]

Hi All,

Need some help with the below situation.

Bought a home 20 yrs back, and it was rented for 3 yrs between those 10 yrs. i.e. years 1,2 and 3 personal home, years 4,5,6 it was rental, year 7 and 8 was vacant but CPA claimed depreciation, then years 9 to 20 personal home (no depreciation claimed in taxes). Then Sold it last year 2023.

I am now filing taxes (I am using turbo tax) and I have a few questions:

- do I file this as a sale of personal home or a mix of personal and business property? (TT has both options)

- there was depreciation claimed in returns for years 4,5,6,7 and 8. So, how do I recapture this?

- year 7 and 8 nobody lived but in the tax the CPA claimed depreciation. Do I still recapture this? The thing to note was that this depreciation didn't reduce my taxes. The tax form says final deduction allowed as 0.

- This was a foreign home and I paid taxes on the sale. In form 1116 how do I enter this deduction? typically it asks for income and tax paid. Here is the income the sale price or the gains?

- Apart from improvement costs and selling cost, are there any other deductions I can take now? (e.g. prior year maintenance costs during renting years?)

Any help appreciated.
Thank you.

[AmyC · Accepted solution]

1. When you enter sale of a main home, you will indicate that it was used for business purposes.

2. You will enter the depreciation taken when the program asks

3. Since no depreciation was taken for those 2 years, there is nothing to recapture.

4. You will enter the full amount of the income from the sale on the 1116. Since the foreign tax credit is  based on percentage of foreign income, you want the full income along with the tax paid.

5. You already claimed maintenance while it was a rental, you can't claim it again.