The 3-in-5 window
Section 121 requires 2 of the last 5 years as a primary residence. Once you rent the home for 3+ consecutive years, you lose the exclusion. Selling within the window protects the exclusion on the personal portion.
Depreciation starts immediately
The moment the home goes on the rental market, you depreciate 27.5-year straight-line on the building value (land isn't depreciable). Depreciation taken (or allowable) must be recaptured at up to 25% on eventual sale.
Common questions
- What's the basis for depreciation?
- Lower of your adjusted basis or FMV on the date of conversion.
Related
Personal Income Tax Preparation
Federal and state 1040 preparation with year-round planning. We handle W-2, 1099, K-1, rental, and crypto income for individuals in Florida and all 50 states.
Tax Planning
Year-round tax planning for individuals and business owners. We project the year's income quarterly and model decisions before they become tax liabilities.
Taxes After Selling a Home
Section 121 excludes up to $250K single / $500K MFJ of gain on your primary home. The 2-of-5-year ownership and use tests, partial exclusions, and recapture.