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I have owned a duplex for 35 yrs., lived on one side for 20…

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I have owned a...

I have owned a duplex for 35 yrs., lived on one side for 20 plus, rented other side out, sold it this year, fully depreciated, can I claim home exemption

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Submitted: 4 months ago.Category: Tax
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3/15/2018
Tax Professional: Stephen G., Sr Income Tax Expert replied 4 months ago
Stephen G.
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Hello, my name is***** goal is to give you a complete & accurate answer. I am working on your request now & I will respond as soon as possible.

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Tax Professional: Stephen G., Sr Income Tax Expert replied 4 months ago

If you lived in your half of the Duplex for at least 2 out of the 5 years ending with the date of sale, you can use the capital gains exception for 1/2 of the sale of the property.

The other 1/2 (rented) would not qualify and you would have to report 1/2 of the sales proceeds for that portion of the building as a long-term capital gain on Form 8949 and Schedule D.

If you properly allocated a portion of the original purchase price to the Land (which wouldn't have been subject to depreciation), then 1/2 of the amount that you originally allocated to the Land would serve as the tax basis for the rental 1/2 of the duplex and would reduce the taxable capital gain. The remaining 1/2 of the Land allocation would increase the tax basis of the 1/2 of the property allocated to your personal residence.

Let me know if you have any follow-up questions.

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Thanks very much,

Steve G.

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