I have sold my house and I rented it out for 4 of the 12 years I lived there how do capital gains work - the house price significantly increased after I moved back in?

Forum|Forum|1 year ago
January 16, 2025
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I cannot seem to find online how to fill in the appropriate forms - I do not want to pay more capital gains than required and should not have to pay for any of the years I have lived there but it is not clear

AmeliesUncle

Are you saying the home was your Principal Residence AFTER it was a rental property?

If so, you'll have "Nonqualified Use". When you are entering the sale of the home in TurboTax, it has a question that asks about it (the question should also mention something about 2008). Read it very carefully. You will enter the number of days you owned the home and the number of days it was your Principal Residence.

The Principal Residence exclusion will be prorated. Roughly 1/3 (4/12ths) of the profit can't be excluded, plus you'll pay tax on the gain due to the depreciation that you were eligible to take.

kristen-vaccherAuthor

@AmeliesUncle It was my principal residence before and after we rented it. Also is this for Canadian tax law? Also for the year we moved back it actually went lower than the price we bought it for does that matter?