Benjamin Yazersky CPA <BYaz55DoNotHitReply[at]netscape.net> wrote:
- quote -

New regs last year: When home sale exclusion otherwise
applies and you have (or had) some business use, you only
pay tax on the accumulated depreciation taken since 1997.
You do not pay tax on the gain which represents the portion
of your home office.

To answer OP question, the depreciation represents a
reduction in the basis of your home. In your example, the
depreciated basis is $90,000 and the gain is actually
$160,000. Upon sale, you pay tax on the $10,000
depreciation. The rest of the gain, $150,000, is tax free
(assuming the home sale exclusion rules are otherwise met).

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NewBus5798 wrote:

- quote -

The former.

I disagree with Mr. Yazersky. I think only the depreciation
(although you should note tha it's on the 40 year schedule,
rather than 27.5 for residential real estate) is taxed at a
maximum of 25%.

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"NewBus5798" <newbus5798[at]aol.com> wrote:

- quote -

You will have to pay tax on the gain which represents the
portion of your home office. Its not the amount of
accumulated depreciation. Your own CPA/tax advisor can help
you understand the calculations as they apply to you.

--
<<< Benjamin Yazersky CPA [NJ & NY] > >
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Hi Folks-
Posted this a week or so ago but haven't gotten any
responses. Can anyone help?

I sold my house in 2003 and have been claiming a home office
for a few years (I'm self-employed). I understand that my
home still qualifies for the $250,000 home sale exemption
but I'm not sure about the depreciation. I think I have to
report that but don't quite understand. If I bought the
house for $100,000 and sold it for $250,000 and claimed
$10,000 depreciation, do I pay tax on the $10,000 even
though the profit is less than $250,000 or do I just reduce
the cost of the house by the amount of the depreciation?

Thanks for your help,
Chris

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