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Updated almost 6 years ago,
Capital Gains on primary residence turned rental
Hi BP Community,
I’m sorry to do this but I’ve been looking for days and can’t seem to decipher all the information I’ve read correctly. I’m trying to determine my tax liability on the sale of a former primary residence turned rental. Dates/$ are changed for ease:
March 1, 2015: purchase property for 250k (no adjustments to basis)
March 2, 2017: convert property to LT rental
March 1, 2019: sell home for 300k (no adj to proceeds)
Depreciation: 10k
I know that I am subject to depreciation recapture in the 10k but is it at 25% or at my marginal tax rate? The second question is regarding the 50k in capital gains. Am I exempt from taxes on the entire 50k or only the portion related to my residence there (50% or 25k)?
I really appreciate any insight into this as I can’t seem to get a clear answer based on the most recent tax code changes.