Taking depreciation on property—whether a principal residence, rental property or second home—increases your capital gain (and therefore tax liability) upon sale. Tax treatment of depreciation claimed on real property varies depending on whether depreciation was taken before or after May 6, 1997.
IN THE KNOW: Taxation of real-property depreciation is a complicated subject. For detailed information, consult IRS Publication 523 “Selling Your Home” (available online at www.IRS.gov) or contact a tax professional.
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