Sale of rental property that was previously primary residence

Forum|Forum|11 months ago
May 1, 2025
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I am selling a rental property in CA that was previously my primary residence until July 2022 when it became a rental. I now live in AZ. Will I qualify for the $250,000 exclusion on the gain from selling it both on my Federal and CA state returns?

RobertB4444

You have to live in the house for 2 out of the last five years to qualify for the exclusion. So 2021 and 2022 will count.

However, you will still have to pay tax on the depreciation recapture for the three years that the house was a rental. So you will be able to exclude up to $250,000 of gain from taxable income but the amount that you took as a deduction for 2022 and 2023 and whatever part of 2024 it was a rental will be taxed as regular income.

@Iris99

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Iris99Author

Thank you! Everything I read in the tax instructions sounded like I would qualify but I had a tax preparer tell me that I would not because it was not currently my primary residence. Think I'll stick with Turbo Tax.