Capital Gains on Sale of Primary residence converted to Rental

[Bhanu P.]

Please help me understand the Capital Gain implication on tax liability for the following scenario.

Purchase Date: Aug 2012 (Bought as Primary residence)

Lived There: Aug 2012- Sep 2014 (24 months)

Rental period: Sep 2014 – Apr 2017 (32 months)

Planned Sale date: May 2017 to Aug 2017 (so that 2 years of 5 years period before the sale is used by the seller as Primary residence).

Anticipated Capital Gains: 100K

Question # 1: Impact of depreciation will be recaptured and taxed at 25%

Since I convert it to rental property now for 3 years before the sale & if I claim 5K as rental property depreciation per annum, thus I am responsible to pay 25% tax on this 15K?

Question # 2: Is there any proration of the capital gain will be incurred to the period of rental?

Since we have 100K capital gains as a result of 5 Years of ownership, out of which 2 years are primary home and 3 years are rental – does IRS prorate the capital gains so that I do still have to pay 3/5th of the capital gain tax?

In that case if I sell as planned in 2017, I have to pay capital gains on $60K?

Thanks so much for your help!!!