I am working on a return where the TP was set up with a OIH for about 6 months. The person who did the return knew the house was sold when they did the return. The problem I am having is getting the CG to only effect that 8 month period, they owned the home for about 4 years. I'm thinking the appreicated value of the house over that 4 years shouldn't be counted for the 8 months they had the home office. I have wrestled with this for sometime can someone tell me what I'm missing?
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What you're missing is ...
... that when a house is sold, only depreciation on the business portion is taken into account, and it is classified as Unrecaptured ยง1250 Gain.
You stated that the OIH was only done for 6 (or 8) months before the house was sold. If that business use was entirely in a single calendar year, rather than spanning two calendar years, no depreciation should be taken at all.Roland Slugg
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Thank You
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