Recapturing depreciation on sale of primary res - Posted by HR

Posted by JHyre in Ohio on February 16, 2002 at 06:26:51:

Depreciation does get recaptured. If I follow correctly, you were on top floor from 1997-1999, so you have apparantly met the 2 year rule and the sale should still be tax-free as to that portion of the building (2 of the last 5 years)- it appears that you did not depreciate the residential portion when you or your relative was there (a good thing)…count the days as of when you sell, you may be losing “residence” days as time goes on (i.e.- sell ASAP!).

John Hyre

Recapturing depreciation on sale of primary res - Posted by HR

Posted by HR on February 12, 2002 at 14:37:48:

Hi John,

Hope all is well with you. I’m looking forward to seeing you at the convention this year. Hope you have had a good year. Mine is going well so far.

My question pertains to the rules governing the sale of one’s personal residence. I believe I know the answer, but I thought I’d verify it anyway.

In 1997, I bought my personal residence, a duplex. That year, I rented the first floor and depreciated the corresponding amount on my taxes. I have had a family member living with us ever since 1999, paying no rental income.

When I sell this home later this month, do I have to recapture the depreciation I took in 1997 and 1998? Does my ownership of it as a sfr for over three years “wipe out” the prior use so I can take advantage of the 2 year rule and pay no taxes on its sale?

It’s appreciated about 100k, and I’ve alloted 40% of the value to the rental unit. It has been one unit as far as I’m concerned (with no income or expenses) since 1998. That’s three years ago. I think I know the answer. But I’m hoping otherwise.