Depreciation of Main Residence

[RLymanC]

Client rented out main residence for 9 months in 2006 while trying to sell. The allowable depreciation was taken. Home sold in 2007

Entire gain qualifies for Sec. 121 exclusion. How is depreciation handled?

My thinking is Line 2 on schedule D and reduce the exclusion by the amount of depreciation.

Sort of lost on this one, would appreciate some direction.

[Roland Slugg]

§1250 gain

Dear RLymanC

The depreciation is taxable as §1250 gain. There is probably a screen on your tax prep software for reporting the sale of a residence, and it should cover this. The software I use has it as a sub-screen for Schedule D.