I have a question regarding the sale of a rental property that I previously lived in. I started renting it out in May 2022 and am looking to sell the property this summer. From what I understand is that I would need to file a section 1250 recapture of the depreciation from renting it out the last 2 years and then the remaining capital gains would then be tax free because I would still qualify for the 2 out of the last 5 years. Is this correct?
Also the section 1250 recapture would be the full depreciation that I claimed for 2 years or is it only considering the depreciation I claimed minus the straight line depreciation that would be added to my ordinary income?
Thank you.