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I'm sure this is an elementary question, so apologies in advance.

We have a co-op, of which half is rented out. We bought it March '02, and started renting half in Sept '03, which is also when we moved out of state. Now we consider it half rental, half second home.

Am I correct that we should start depreciating half the adjusted cost basis as of September? And if we sell by Mar '07, would we exclude 18/24 of 500K in gains (I wish!), as it was our principal residence for 18 months out of 5 years, adding back to our gains the depreciation we took?



crossposted to Tax Strategies
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