Hi,

I have a tax related question on my rental home sale. Thanks very much in advance for your help.

I have lived in a house for 9 years. Two years ago bought another house and moved in. For past two years, I am renting out my old house. I am planning to sell the old house now to avoid the capital gain tax using the "living 2 out of 5 years" rule. My potential profit may be around $150K after expenses if the house gets sold. I already claimed depreciation on the house for last couple of years when it is being used as a rental property and filed taxes on the rental income. Please let me know my tax consequences if I sell the home now.
Here are my assumptions
- I pay taxes on the depreciation I claimed treating depreciation amount as a regular income.
- I do not pay any taxes on the $150K Profit since I lived for at least two out of 5 years.

Are these assumptions correct?

Also, another question. If home sale is delayed say for a year or so, do I have to pay capital gain tax on full $150K profit or will it be prorated based on how many months I lived in the house in last 5 years?

Is there anything else I can do to save on taxes?

I appreciate your response and thank you in advance.