Calculating capital gains on a triplex I live in
I am selling a triplex and I have lived in the largest of the three units more than 2 out of the last 5 years. We bought in 2010 for $450K, and our adjusted cost basis is currently $462K (after capital improvements and depreciation). We are in escrow now and the purchase price is 1.175M, so there is a considerable gain.
I understand my wife and I will get up to 500K in homeowner's capital gain exclusion, but that only applies to the unit we actually lived in, not the entire property.
My question is: Do I calculate my homeowner's exclusion on 33.33% of the gain? Or on 39% which is the square foot percentage of the unit I lived in?
Thank you for your help!