Question

sale of primary residence /500K for married couple

Forum|Forum|3 years ago
March 31, 2023
2 replies
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My wife and I sold our primary residence. I have used a portion of the home for our home business for 5 years. we have lived in the home for 20+ years. I took depreciation benefit for last 5 years. When I was going thru TURBOTAX on my home sale I entered the depreciation taken. Do I have to pay capital gains on my depreciation taken? reason is I am only up to 450K of our 500K allowable capital gains for our home sale yet I am seeing I still have to pay capital gains and it looks like it is on the amount of our depreciation taken?

Not A Product Question

DoninGA

Employee

Yes, you have to pay capital gains tax on the depreciation recapture when the home is sold.

R

ricky215Author

Arghhhhh even if I am under the 500K that we are allowed tax frre on the home sale?

DoninGA

Employee

@ricky215 wrote:

Arghhhhh even if I am under the 500K that we are allowed tax frre on the home sale?

Yes. Any type of depreciation must be recaptured when the property is sold. Same thing happens when a rental property is sold.

H

HelenC12

DoninGA is correct. Per IRS Publication 523, page 15: If you used all or part of your home for business or rental after May 6, 1997, you may need to pay back (“recapture”) some or all of the depreciation you were entitled to take on your property. “Recapturing” depreciation means you must include it as ordinary income on your tax return.

Related information: Is the money I made from a home sale taxable?

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R

ricky215Author

I have used TT for all the years I took depreciation

Will TT calculate the value for me or do I need to mine the amount to declare out of those past tax returns?

Thanks all!!

DoninGA

Employee

Not sure if the program will have the depreciation info for a home office for all the years it was being depreciated. I know that it does for rental property if reported each year using TurboTax.

But since you have a business there should be a Depreciation and Amortization Report available on your 2022 tax return. If you are using the TurboTax desktop CD/Download editions click on Forms and the report will be shown on the left side of the screen when in Forms mode. See if the home office is listed on the Report.