My client had a home that was 23% rental for 130 months (March 2009- December 2019). In 2020, the entire home became rental and home sold July 2021. So, they had 18 months at 100%. I am trying to figure out the business portion of the sale. I'm having a tough time.
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For real estate, I don't think you need to divide the sale between personal and business. Just report the full gain on 4797.
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Have you gone through the worksheets in Pub 523? Note there are different calculations if the rental area is separate such as a garage apartment.Comment
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I would limit the personal portion to the last 5 years, and use the exclusion available for someone selling their residence if they have lived in it any portion of the last 5 years. For the first 8 years, I would calculate 23% of the gain and report accordingly.Comment
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