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TaxRobin, Tax Preparer
Category: Capital Gains and Losses
Satisfied Customers: 15731
Experience:  15+ years in Tax preparartion as well as Instructor for tax law, theory, and application
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I have owned a residential house since 1992. I lived in it

Customer Question

I have owned a residential house since 1992. I lived in it until 2010 when we turned it into a rental property. It has been rented since June of 2010 however the current tenant is moving out the end of September 2016. What obligations do I have to the IRS in regards ***** ***** Gains and Deprecation taken? I am retired and have no income other than Social Security, a small annuity and small pension. I appreciate any advice provided.
Sanford Gordon
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  TaxRobin replied 1 year ago.

Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

Expert:  TaxRobin replied 1 year ago.

Looking at how long you lived in the property prior to sell determines if you can exclude any gain from tax. This means that you have to have lived in the home as your main home for at least 2 years out of the last 5 years prior to sale. If you do you can exclude up to $250,000 of gain if single and up to $500,000 if married filing joint.

You changed to rental in 2010, that means you do not meet the 2 year period.

You will treat as the gain the difference in cost plus improvements less depreciation claimed and the sale amount less costs to sale. That amount is the taxable amount. The rate is going to be based on your total income. It could be 0%, 15%, or 20%. It sounds like you may be in the bracket to allow for 0% on the capital gain.

The depreciation is recaptured and counted as income.

You will show this sale on Schedule D and form 4797.

Expert:  TaxRobin replied 1 year ago.

Please post and let me know if you need clarification.