Sale of primary residence

[TheTiger6508]

I previously purchased a home and used it as my primary residence for 4 years, then rented out for 5 years and returned to it and have lived in it as my primary residence for the last 6 years. I am thinking of selling it. What are the income tax consequences besides the recapture of depreciation? My previous depreciation deductions were at the 12% tax rate.

Is thereca difference in income tax consequences whether I sell the primary residence in 2025 or 2026?

[Loretta P]

Hello TheTiger6508,

From your description it sounds like you would meet the test of living in the home for 2 out of the last 5 years for the exclusion of gain on the sale of your primary residence.  You need to enter the sale as a Sale of A Home so that you will be able to apply the occupancy 2 out of the last 5 years exclusion.  While entering this information you will enter the time period it was used as a rental and enter an amount for the accumulated depreciation taken during the time it was used as a rental.   If you had an suspended passive activity losses, you will need to enter the suspended losses and ensure they get released to offset other income.