All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Pioneer
Posts: 1
Registered: ‎07-30-2017
Accepted Solution

How do I figure the tax on depreciation for the sale of a home that was used as a rental for a time

Hi,

I would appreciate advice on what forms I need to fill out and in what sequence for the sale of a home that had been used as a rental for about a year before the sale. I am finding this area of my return very hard to navigate.

 

The home was not a rental at the time of the sale. I meet the criteria for excluding gain on the sale of the house, but I don't think I can exclude the depreciation while the unit was a rental. I can’t figure out how to report that and figure out how much tax I’m supposed to pay. I have already figured out the amount of depreciation.

 

Thank you very much in advance if you can help me with the next steps.

Tax Pro
Posts: 5,442
Registered: ‎02-23-2016

Re: How do I figure the tax on depreciation for the sale of a home that was used as a rental for a t

Hi martslips,

 

Welcome to the H&R Block community.

 

You are correct.  You cannot take an exclusion for 100% of the maximum amount.  You must recapture all allowable depreciation for the year that you rented the house, and the recaptured depreciation is taxable income.  For example, if you could have or did depreciate a maximum of $12,000 for the rental period then instead of $250,000 your maximum exclusion is $238,000.  Your recapture amount is figured on Form 4797 and the sale is reported on Form 8949.  An adjustment is made on Form 8949 for the excludable amount (with depreciation taken into account).  Specifically, the excludable amount is entered in column G as a negative number and you'll enter code "H" in column F of Form 8949.

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)