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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1668
Experience:  Certified Public Accountant
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I owned a condo from 2010-2016. I lived in it from 2010-2014

Customer Question

I owned a condo from 2010-2016. I lived in it from 2010-2014 and rented it from 2014 to June 2016. Do I still qualify for capital gains exemption because it was my primary residence 2 of the last five years even though I rented it?
Submitted: 9 months ago.
Category: Tax
Expert:  Mark Taylor replied 9 months ago.

Hi, my name is Mark. I will be happy to help you with your questions.

Expert:  Mark Taylor replied 9 months ago.

As long as you lived in the condo for 2 out of the past 5 years as your primary residence you would qualify for the exemption. You would have to recapture the depreciation that you claimed during the time that the property was a rental. This would be picked up as ordinary income.

Expert:  Mark Taylor replied 9 months ago.

I hope you found this information to be beneficial. If this answered your question please take a few moments to rate my response. A rating is needed in order for me to receive credit for helping you today. The rating bar is located at the top of the page – ranging from 1 to 5 stars. If you need me to clarify aspect of my response or if there are additional areas of the question that you would like me to consider please let me know. I would be happy to continue the discussion. It has been my pleasure helping you today.

Expert:  Mark Taylor replied 9 months ago.

Please let me know if you have any other questions or need clarification. I am happy to help.

Customer: replied 9 months ago.
would the recapture of the depreciation go towards the 250,000 limit on the sale of a property?
Expert:  Mark Taylor replied 9 months ago.

No the depreciation recapture would be separate from the $250,000 exclusion. How much did you pay for the condo? How much depreciation did you take? What do you think the condo will sell for?

Customer: replied 9 months ago.
Purchased for 190,000. Sold for 382,000 and depreciated $11,263.36 during 2014-2016
Expert:  Mark Taylor replied 9 months ago.

So based on your numbers you would have a gain of $203,263. $192,000 would be tax free. $11,263 would be subject to the recapture. The reason behind this is that you received a ordinary deduction when you claimed this expense. Recapturing the depreciation reverses this expense.

Expert:  Mark Taylor replied 9 months ago.

Did you have a loss on the rental activity for either of the two years? Were you able to take advantage of the loss? If your Adjusted Gross Income (total income) is above $75,000 your loss may have been suspended.