If I plan to sell my house within the next 3-5 years (and I have lived in the home at least 2 of the years), can I depreciate the home and NOT pay capital gains?Individual homeowners can exclude up to $250,000 of gain on the sale of their principal residence if they meet the 2 year ownership and use requirements. The exclusion is $500,000 for married couples. The exclusion can only be once in a 2 year period.
If the residence has been converted to a rental property this exclusion no longer applies. Depreciation is a required expense for rental property. The gain realized on the sale of the rental property will be split between recaptured depreciation subject to a maximum tax rate of 25% and regular capital gain for the remaining amount.
Annette Hall, CPA
515 Keisler Drive
Cary, NC 27518
919-468-0505
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