Taxes required after selling a rental/investment home

[Jandl]

This is a home we lived in for several years. We bought a different home and have been using this property as a rental home.  We are selling the home and would like to discuss our options concerning the taxes we will be expected to pay.

[NancyM5]

If you have not lived in this home for two out of the last five years, then any gain on the sale would be treated as long-term capital gain.  And you would not qualify for the $500,000 exclusion of gain on the sale of a personal residence.  The depreciation expense that you've taken, or should have taken, over the years this was rental property is recaptured at ordinary income tax rates. Tax Law for Selling Real Estate provides an example of that calculation in the section "Straight Sales."  This article also gives you some ideas for postponing the gain through an installment sale or like-kind exchange.