Sale of Home + Rental Property

Forum|Forum|3 years ago
March 8, 2023
1 reply
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I sold a multi-family home during 2022, that was always 50% occupied as my primary residence and 50% held as a rental (entirely since purchase 30+ years ago). Although the sales price less closing costs less original purchase price on the 50% piece that was my primary residence is under the $250,000 exclusion, Turbo Tax is pulling the amount of depreciation recognized on the rental portion after May 6, 1997 as a gain. So for my personal residence, it is recognizing a gain in this amount. Why would the depreciation on my rental impact any gain on my personal residence?

Separately, I am recognizing a gain relating to the rental portion of the property - sales price, less closing costs less land cost (as the building was fully depreciated). I feel like the depreciation is being double counted - reducing the basis of both pieces of property.

TurboTax Home & Biz Windows

Carl11_2

Employee

Turbo Tax is pulling the amount of depreciation recognized on the rental portion after May 6, 1997 as a gain.

That is correct. Recaptured depreciation is taxed as ordinary income, and is not included in the capital gains tax exclusion. You *will* be taxed on the recaptured depreciation.

I feel like the depreciation is being double counted - reducing the basis of both pieces of property.

Probably not the case. But I don't know the details of how you've been reporting the rental portion in the past, as there are several ways you could have been doing it. Likewise, I wouldn't know how/where you're reporting the sale. But since you're using the CD version you can always switch to Forms View (button in upper right) and see the forms so you can "follow the numbers".