[Anonymous]

I bought property for 150k in 2010… “allowable” depreciation was 20k” I sell the house in 2013 for 250… do i exclude 100k with 20k added to ordinary income, or do i exclude 120k….or are both wrong?

[Anonymous]

There is a lot than can go into this, but for this specific question. First calculate the realized gain (Sales $ – (Cost – Depreciation)= $250k – $130k= $120k. The $130k is $150k of cost less 20k of depreciation. The $20k will be a S1250 depreciation recapture gain that is not subject to the $250k exclusion. However, the other $100k is reduced to zero by the $250k exclusion.

FINAL ANSWER: $20k taxable S1250 gain.

Hope this helps.

[ibCPAsoon]

The bigger question is was this ever a rental?

Based off your depreciation figure of $20,000 it looks like it went straight from purchase as a rental and was never your primary residence.

You need to live in the house for at least 2 out of the past 5 years…so if it was in fact a 100% rental and never your home….then you get NO exclusion.

But if you went straight into it as your residence…the amount of depreciation you could have taken as a rental is irrelevant and the full gain is excludible since it is under the $250,000 gain excluision ($500,000 if MFJ).

BEC - PASS JULY 2014
FAR - PASS DEC 2014
AUD - PASS FEB 2015
REG - PASS MAY 2015

[ibCPAsoon]

Sorry for the double post – wont let me edit.

Is there a specific MCQ or Simulation you are going off of? Post the whole Question/Answer and I may be able to give a more specific response.

BEC - PASS JULY 2014
FAR - PASS DEC 2014
AUD - PASS FEB 2015
REG - PASS MAY 2015

[Author]

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