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Taxes on House Sale -primary residence turned rent 

licid9
Posts: 45

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3/25/2016
licid9
Posts: 45
For our particular scenario....our CPA and some smart people over at Bogleheads.org stated:

A) Since we lived in the house for 2 of the last 5 years as our primary residence, when we sell - any gains would not be taxed because it was our primary residence within X timeframe.

B) Any depreciation would be "re-captured" when we file our 2016 taxes (in 2017) - meaning we'd have to pay back whatever that amount was for half 2014, all 2015 and the first 2 months of 2016 all at once with 2017 taxes.

Unfortunately, I'm not sure how this all factors together for your scenario.
edited by licid9 on 3/25/2016
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FatStacks
Posts: 28

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3/10/2016
FatStacks
Posts: 28
When everything is all said and done, can you let us know how it went?
I'm currently in your exact same boat. We bought a house, lived in it for a number of years, and are now renting it out with plans to sell it when (if?) the housing market ever recovers. Our CPA is also depreciating the home.

Our situation will be different in that we won't make a profit on the home's value, however, I still believe there are taxes to pay.
Using some simple numbers, let's say we bought our house for $150k, and put it "into service" when we started renting it, when the home's value was $120k. I think we could probably write that $30k off as a loss (when we eventually sell).

Our CPA has been depreciating it for a few years now, so let' say it's (depreciated) value is only at $100k. If we eventually sell the house for $110k, I think we'll have to pay taxes on the $10k "profit" ($110k sale price minus the $100k depreciated value), but that might get washed out by the $30k loss we took when we first put it into service. Obviously these questions will get answered by our CPA when it comes time (or the link you provided, if I can work through their lingo), but since you're going through a similar experience, I'm curious how it works out for you.
Thanks in advance!
edited by FatStacks on 3/10/2016
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licid9
Posts: 45

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3/5/2016
licid9
Posts: 45
Someone provided me with the IRS link (https://www.irs.gov/publications/p523/ar02.html) which answers my question.
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licid9
Posts: 45

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3/3/2016
licid9
Posts: 45
Is someone able to point me in a direction regarding the following scenario:

We bought our first home and lived in it for 8 years. We moved out and rented it for the last 2 years (placing ownership at 10 years now) and then listed it on the MLS when the tenants moved out this month. The house appreciated in value by just over 40k and now has a contract on it. It was purchased by us individually and remained under our names (myself and my spouse) while rented. Our CPA did whatever is done to depreciate the house in our taxes in 2014 and I assume they'll do the same for 2015 tax year --- hopefully someone understands what I mean by that.

We see the CPA in 2 weeks --- but we have a closing date prior to our meeting and I want to get a better understanding today.

Question:
Will this result in any capital gains tax on 2016 taxes since this isn't our primary residence today?
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