If I lived in my rental property as my primary residence two of the last 5 years before selling, and buy a new property, I avoid capital gains tax. Is this also true with capital gains taxes on depreciation? Thanks in advance for your answer.
elster,
My understanding is that any depreciation that was taken on an investment property will have to be recaptured when the property is sold. If you have lived in the property for 2 of the last 5 years, then there are no capital gains taxes (up to 250k single or 500k per couple), but you would still have to pay the 25 percent of the depreciation recapture (whether you took the depreciation or not).
Wilson