Capital Gains - sold former rental/primary residence/vacant home

[Ed Zarecky]

Hi - there's a little back story here that'll I'll try to keep brief.  Ultimately, I'm glutton for punishment and do my taxes myself and have an issue on how to handle a property I sold in 2021.

Property History:

- Bought in July 2014 as an investment property (rental); paid $118k

- Rented property from August 2014 through July 2016 (took depreciation)

- Divorced July 2015; full rights to property

- Made the property my primary residence August 2016 through August 2020

- Home was vacant August 2020 until sold in August 2021.  While the home was vacant I renovated the home myself (spent ~$25k).  Crazy to let it sit for a year?  Not really, the upgrades and carry cost was less than the appreciation over that year. Market value in August 2020 was max of $210k.  Sold for $281k in 2021.

So, I'm using turbo tax and I can't figure out how to handle this property in their system.  The way they want me to handle the house leads me to a tax bill of around $25k on the house.  I've read IRS Pub 523 and it doesn't seem to fit my situation exactly.  Any ideas or am I on the path to using the accountant I've used in the past?

Thanks in advance for any thoughts/ideas/input!