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Home Sale Exclusion After Renting It Out

The home was a rental before we moved in. How much of the gain can we still exclude? Every piece below can be linked to, so it opens in a window on your reader's screen, current as of the record. No form to fill in.

2026 law · Reviewed September 6, 2026 · The full page, with methodology and sources · the terms · All tools

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The sale price, cost, depreciation, years owned, and years rented before moving in; the gain split into excluded, taxed at the gains rate, and taxed as depreciation, with the tax. In a frame it carries no cookies, no tracking, and a visible link back to the methodology. Your site has to allow frames; most do. The link that opens it in a small window is on the professionals page.

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In plain words.
Selling your main home lets you skip tax on a large chunk of the profit. But if the home was a rental before you moved in, the share of the profit that belongs to those rental years is taxed anyway, and the depreciation you took while renting is taxed at its own rate. Renting the home out after you move out does not have the same effect, as long as you sell within a few years. This tool takes the sale, the years owned and rented, and the depreciation, and splits the profit into what is excluded and what is taxed.
Why it matters.
People who retire into a former rental, a lake house or a condo they once let out, are surprised at closing. The years before they moved in count against them, and nothing done later changes that.
An example.
Bought for $400,000, rented four of ten years before you moved in, $40,000 of depreciation, sold for $900,000 on a joint return: about $200,000 of the gain is taxable because of the rental years, the depreciation is taxed at 25 percent, and the rest is excluded. About $40,000 of tax, against $10,000 had it never been rented.
Where it stops.
It counts whole years and treats the rental years as after 2008. It does not handle a home office, a partial rental, a sale at a loss, or state tax, and the depreciation figure should come from the returns or a CPA.

Everything here reads from one reviewed record, so a copied piece carries its year and its review date. When the law moves, the embed updates by itself; a copied table or chart keeps the year in its caption. Corrections are welcome through the contact page.