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07-30-2017 03:14 PM
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.
Solved! Go to Solution.
08-01-2017 09:06 PM
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.
Senior Tax Advisor (Tampa, FL)