We sold our rent house last summer 2016. The tenant lived there 4 1/2 years, got married, and moved. We occupied the house before we had this tenant. We owned the house since 2002. Do we have to pay taxes on the profit from the sale of our house? Thank you 😀

  • 1
    Did you claim the income on Schedule E along with required depreciation? Oops, please confirm country for this tax question. Jan 14 '17 at 23:55
  • United States of America 👍🇺🇸
    – user52375
    Jan 14 '17 at 23:57
  • 1
    And the other question in my comment. Jan 14 '17 at 23:58
  • Yes each year a schedule E was filed for our rent house.
    – user52375
    Jan 15 '17 at 0:08
  • 2
    Yes you have to pay capital gains tax.
    – user9722
    Jan 15 '17 at 0:10

Yes. To avoid tax on gains, you'd have to live in the house for at least 2 of the 5 years prior to sale.

At this point, you'd have a cost basis lowered by the depreciation you took while it was a rental. You need to account for the difference between that and you sales proceeds net of sales expenses.

  • Thanks JoeTaxpayer! Guess I need a great tax accountant! We have used H&R Block in the past but they required WAY too much of our refund! Should we take the last 4 years of schedule E's to the accountant? Thanks again 👍
    – user52375
    Jan 15 '17 at 0:27
  • Tax preparers can charge by the form or by the hour. To charge based on amount of the refund is illegal. Last year's (2015) schedule e and supporting docs should give you the details needed to file this last year of your rental. Jan 15 '17 at 0:31
  • JoeTaxpayer, Yes they charged by the form which still took an incredible amount away from our refund. I appreciate your answers! 😀
    – user52375
    Jan 15 '17 at 0:37

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