rental house

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  • #4565
    plasticfish99
    Participant

    I lived in my primary residence from 2007 to 2017. I moved and rented out my house may of 2017 under today. if I sell the house do I have to pay capital gains or do I qualify for the 2 out of 5 rule? thanks

    #4567
    kaneohe
    Participant

    Sounds like you would qualify under the 2/5 rule if you sold within a reasonable time period. However note that the depreciation you took
    (or should have taken) does not qualify to be excluded as part of the 250K
    (or 500K if MFJ) gain.
    https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home/property-basis-sale-of-home-etc/property-basis-sale-of-home-etc-5

    “For rental property, the law has additional limits on the amount you may exclude. You may not exclude the part of your gain equal to any depreciation deduction allowed or allowable for periods after May 6, 1997.”

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