Taxes on sale of home

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lubdub
Posts: 2
Joined: Mon Apr 08, 2019 4:27 pm

Taxes on sale of home

Post by lubdub » Mon Aug 12, 2019 11:18 pm

I'm selling a home for $50k profit. The home was our primary residence for 2 of the last 5 years We converted it to a rental property for the last 3 years but DID NOT own another home (we lived in a rental out of state for work reasons). We just recently purchased a second/primary home in June 2019. I meet all the other IRS requirement for exclusion of gain test according to IRS pub 523.

Any idea if profit from the sale of the home will require payment of capital gains?

Thanks.

MarkNYC
Posts: 1516
Joined: Mon May 05, 2008 7:58 pm

Re: Taxes on sale of home

Post by MarkNYC » Tue Aug 13, 2019 5:29 pm

The depreciation allowable during the 3-year rental period will reduce the basis in the property, causing an increase in the gain upon sale. The portion of the gain attributable to depreciation taken is not eligible for the principal residence exclusion, so that specific portion of the profit will be taxable. How much tax, if any, you pay on that taxable gain will depend on the nature and amount of various other items on your tax return.

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