Live in flip that was also a rental

[Justin Robinson-Howe]

Hi all!

Few questions here. I recently purchased an investment property from a family member and am just trying to help them out with capital gains tax now. The caveat there is that the property has 4 dwellings and one of the dwellings they resided in as their primary residence from June 2016 to October 2018, so I believe they should qualify for the 2 of the last 5 year tax break. They technically built and owned the property in 2004 and let their in-laws stay there until their passing in 2016, at which time they moved into the house. Then in October 2018 they moved off the property to their new primary residence and rented the house from that time until our sale in December 2015. So details on the sale are below so trying to figure out what the cap gain to record because we're having a bit of a lack of confidence in their accountant. Also, assuming the portion of the cap gain allocated towards that house is tax free, is the ~$12k in depreciation recaptured at 25%? As always I really appreciate the help of the BP community!

			HOME
	1	2	3	4		Total
Town Value	198,106	66,458	167,706	135,713		567,983
	35%	12%	30%	24%
Selling Price	191,834	64,354	162,396	131,416		550,000
Closing Costs	527	177	446	361		1,510
Cost	38,113	111,381	153,984	57,721		361,199
A/D	32,912	17,738	12,599	40,805		104,054
Net Cost	5,201	93,643	141,385	16,916		257,145
Gain	186,106	(29,466)	20,565	114,139		291,345
Gain/Selling Price	97.01%		12.66%	86.85%
Installment	38,236			23,450		437,000
Payment (loan payoff)	39,413	13,222	33,365	27,000		113,000
		Rate	Tax
Cap Gain on 2020 Return	52,786	15%	7,917.95
*C13+D13+B17+E17
Or
Cap Gain on 2020 Return	32,221	15%	4,833.15
*C13+B17+E17
Depreciation Recapture	12,599	25%	3,149.75
Ordinary Income	32,625
Div	278
SS	15,427
Rental Loss	(9,068)
Cap gains	?
Total Income	39,262