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I'm in the process of selling my house. I took a home office deduction a couple times, and I am concerned about what I may be responsible for at tax time.

My profit from selling the house is nowhere near the 250k/500k limit so I'm not worried about paying capital gains tax.

I am concerned about something I'm hearing about related to "recapturing the depreciation deduction". Where can I look on my previous returns to see the figures that would be used to calculate this? My understanding is that there should be a figure on my tax return, possibly in Form 8829, that I will be responsible for paying 25% of at tax time.

  • This is a reason why you needed to keep some tax documents for a long time. It can be decades between the deduction and the recapture. – mhoran_psprep May 11 '13 at 14:17
  • Thankfully I only claimed it the past couple years. Thanks. – Brian David Berman May 11 '13 at 14:20
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You got it right. It is in part III of the form (form 8829, that is, in its current form). You pay 25% tax on the amounts deducted as depreciation.

That is if you sell at more that your current (= post depreciation) basis.

Talk to your tax adviser about the details. He may be able to help you getting the old forms if you didn't keep the copies, you'll definitely need them. You'll have to request the copies from the IRS.

  • I'm really hoping it's 25% on Part III #41. If so, the numbers are small and this will be a huge relief. – Brian David Berman May 10 '13 at 22:42
  • Yes, I would expect it to be small. But make sure not to omit anything, as the IRS likes nailing people who take the home office deduction but forget the recapture part. – littleadv May 10 '13 at 22:43

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