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Financial Planning / Tax Strategies
|Subject: tax on rental/former res.||Date: 4/1/2002 11:58 AM|
|Author: cabreck||Number: 59954 of 121219|
I am selling a townhouse right now that I lived in for 2.5 years 3/97-8/99, and have rented out since (I own no other property and currently rent). I stand to make a pretty decent profit.
You can see my question below and a response I received on another board. Can anyone provide further clarification? Maybe a definition of recaptured depreciation? I assume given my scenario, I won't be taxed on the gains except the amount claimed as depreciation (i.e. I will have to pay taxes on the depreciation claimed $10,000 (.25) = $2500)
I understand that I won't be taxed on capital gains (up to $250,000, since I am single) I make since I did live there 2 of the last 5 but I will be taxed on the depreciation I claimed the past 2 years.
Sounds right to me (provided you haven't claimed another "principal residence" capital gain exemption in the 48 months preceeding your home sale).
I claimed around $5000 each year (for 2000/2001) depreciation.
The depreciated amount (but not other deductions) will be recaptured when you sell...I understand that the recaptured depreciation is taxed at 25%.
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