martha2
Level 1
โ05-15-2021
06:53 PM
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
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?
TaxGuyBill
Level 15
โ05-15-2021
06:58 PM
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
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 ยง121 exclusion).
martha2
Level 1
โ05-15-2021
07:33 PM
- Mark as New
- Bookmark
- Subscribe
- Permalink
- Report Inappropriate Content
Thank you!