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March 6, 2020
Question

Sale of Rental Property on Home I lived in 2.5 of the last 5 years

  • March 6, 2020
  • 1 reply
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My husband and I owned and lived in our condo for 2.5 years before converting it to a rental property in April 2018.  It was rented through April 2019 (approximately 13 months total), then vacant for two months as we listed and sold the property at a gain  in June 2019.  For 2018 taxes, we recognized the rental income, expenses, and depreciation on the property.  For 2019 tax purposes, is the business use for 100% or do we need to reduce for the period of time it was vacant?  If 100% is accurate, turbotax is calculating depreciation for 2019 but later is prompting us to recapture all depreciation previously taken.  Would this recapture include both the 2018 and 2019 amount?
Turbotax also says that if the business use percentage varied over the life of the asset, the program cannot automatically compute the sale information.  But the system doesn't indicate how to calculate this amount or what schedule to use.  Where do I input this information?  Did my business use vary if the first few years were 0%, then 100% in 2019?
And guidance is greatly appreciated!

    1 reply

    March 6, 2020

    You want the business use to be 100% the entire time it was not your personal residence.   Do not reduce the percentage for the time it was vacant.  Your business use did not vary. That would be for something like you lived in the condo and rented out a bedroom and then rented out the entire condo.  Your business use didn't change while it was a rental, so it is not a varying business use.  And yes, your depreciation recapture would include both 2018 & 2019 amounts.

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