Help With Depreciation Recapture

[Jim Macedon]

Could someone explain depreciation recapture to me?

Here's the specific scenario I'm thinking about.  You have a rental property for several years.  You are obviously claiming depreciation during that time.  You decide to stop renting out the property and move in.  It becomes your primary residence for two years or longer.  You sell the property.  What are all the tax implications?

[Wayne Brooks]

@Dennis Dahlberg Horrible advice, which his accountant can explain to him.

@Jim Macedon Two things would occur if you moved back into the house for two years or more, then sell.

1) yes, you have to declare All the depreciation you previously claimed/could have claimed.

2) You will Not get the full 121 exemption.....you have “non qualified” use.  Since you occupied for two years After it was a rental, the cap gains that will be exempt will be the prorata time it was your residence verses the time it was a rental.

ie.  8 years as a rental, 2 years as your primary....20% of gain is exempt, 80% is Not.