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URL:  http://boards.fool.com/tax-on-rentalformer-res-16985775.aspx

Subject:  tax on rental/former res. Date:  4/1/2002  11:58 AM
Author:  cabreck Number:  59954 of 121061

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).

Except...

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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