Hello,
For the last 20 years we rented the first floor of our two story primary residence as a seperate rental apartnment. The accountsnt used half of the utilities, taxes, insurance, and other expenses as deductions against the rental income. He also took some depreciation every year. In March of 2013 my wife and I divorced, she stayed in the house I moved out, we maintained the first floor as a rental. I retained 50% ownership in the property.
In May of 2014 we sold the property. The appraised value when we started renting was $186,000, half was used as the value of the rental. We sold for $330,000.
How should the gains be treated and how much of the depreciation if any needs to be recaptured?
Thank you
John