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martha2
Level 2
May 15, 2021

sale of primary resident with rental use

  • May 15, 2021
  • 1 reply
  • 5 views

Client has a sale of primary residence that was converted to a rental.  The eligibility test is met so client may exclude loan per section 121 up to $500k, married filing jointly.  Is the depreciation recapture of the home taken while it was a rental charged against the basis or does it have to be taxed as gain on sale?

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    1 reply

    T
    TaxGuyBill
    Level 15
    May 15, 2021

    The depreciation reduces the Basis.  And the gain from the sale that is due to that depreciation is taxable (it does not qualify to be covered by the §121 exclusion).

      M
      martha2Author
      Level 2
      May 16, 2021

      Thank you!

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