Okay, I was thinking about selling my rental property (I live in it). I just met with my tax person who said that I am just a few years from avoiding depreciation recapture because I have been in the house for almost 20 years. She indicated that after the 27.5 years of depreciation that the depreciation recapture goes away. Does anyone know if this is correct? I have never seen anything indicating that this may be the case. The only way I have seen that it has been avoided is by doing a 1031 exchange. --32.211.xxx.xxx

All depreciation is recaptured. It does not go away. --209.122.xx.xxx

That's what I thought! --32.211.xxx.xxx

Unless the rules have changed, WHEN YOU DIE, your heirs inherit your property without the depreciation being recaptured. They inherit at a "stepped up" basis of what the property is worth now. --76.189.xxx.xxx

--73.16.xxx.x

Either I misunderstand depreciation or you need a new tax person. --68.60.xxx.xx

If you don't think your cpa is great, fire them asap. I don't think your cpa is great. --174.234.xxx.xx

I'd ask your CPA one more time to clarify that. If she gives you the wrong answer again, it's time to find a new CPA. We fired ours after she failed to depreciate our office space, potentially costing us $$$.... --204.210.xxx.xxx

It is clear that you didn't understand your accountant or he is a joker? --47.156.xx.xx

And nowadays "living in a rental to turn it into your primary residence" is offset by the amount of time the place was actually a rental. New Tax Law. You can't just live there 2 out of 5 years and wipe out the fact that it was a rental. The time you live there personally is offset by the the time it was actually a rental. --50.82.xxx.xx

If instead, however, yours is a mulit-unit and you live in one of the units, my statement does not apply. --68.156.xx.xx

Thanks,all. It is a two-family and I rent out half and live in the other half. It was a tax preparer that told me this not a CPA. Her assertion was that after the 27.5 years the depreciation is absolved. I agree with you guys and don't think that is correct. --166.149.xxx.xx

Thanks,all. It is a two-family and I rent out half and live in the other half. It was a tax preparer that told me this not a CPA. Her assertion was that after the 27.5 years the depreciation is absolved. I agree with you guys and don't think that is correct. --166.149.xxx.xx

Thanks,all. It is a two-family and I rent out half and live in the other half. It was a tax preparer that told me this not a CPA. Her assertion was that after the 27.5 years the depreciation is absolved. I agree with you guys and don't think that is correct. --166.149.xxx.xx

Thanks,all. It is a two-family and I rent out half and live in the other half. It was a tax preparer that told me this not a CPA. Her assertion was that after the 27.5 years the depreciation is absolved. I agree with you guys and don't think that is correct. --166.149.xxx.xx

It used to be that if you were using Double Declining Balance for depreciation, the recapture would go away. Nobody uses DDB any more. --173.15.xx.xxx

Steve/TN, not true under the new tax laws. Actually not that new: 2009, I think. --50.82.xxx.xx

so ... is a way around it to get a mortgage on your deathbed then have your heirs pay off the mortgage with the tax free proceeds of the sale? --199.247.xx.xx

I'm still hearing people saying that you can live in a property two of the last five years and avoid the repaying write-offs enjoyed as when it was a rental property. Just not true... --24.20.xxx.xxx

Yeah, that got changed with the 2017 changes, I believe you have to live for 5 years now. --107.242.xxx.x

WMH is right. The law changed in 2009 so that depreciation is captured no matter what and you only get to take the tax-free capital gains prorated for the proportion of time you lived in the property. If the years before 2009 were the rental years--anyway, it starts getting complicated. A good CPA will be able to tell you what applies to your specific situation. --204.210.xxx.xxx

Robert J,it sounds like it is not worth selling a property at all. By the time the government gets through there is no profit left. Anything gained while renting, you just lost. --73.120.xx.xxx

--47.156.xx.xx

Wow great discussion. Yes you still have to pay recapture depreciation. I am researching Delaware Trusts for 1031 exchanges now in order to avoid this when I sell some more properties this year. It seems to be a booming industry. --75.67.xxx.xxx

As for living in a former rental house, when you sell it you count the months you lived in it and count the months you rented and use the percentage to calculate residence exclusion. --173.15.xx.xxx

What is the affordable care tax about? What does that have to do with property? --73.120.xx.xxx

When our last president took office, he passed the affordable care act, medical insurance for all -- even with pre-existing conditions. The cost for the government was in the Billions. To generate capital for this hey put a TAX on the Sell of Real Estate. If a single person makes over $200,000 in come with the capital gains tax, they needed to pay 3.2% tax towards medical insurance for all. For a couple filing together, if they make over $250,000, then they will have to pay this extra tax. --47.156.xx.xx

Thank you Robert J for explaining. --73.120.xx.xxx

Your ability to write it off from the initial investment goes away at 27.5. Uncle Sam will still want his money when you sell. It is 25% on the accumulated depreciation amount. He will also want a percentage of the long term capital gain. Greedy isn't he? --72.23.xxx.xx