Depreciation?

poskeyreunion

LoanSafe Member
Apr 5, 2012
7
0
1
We did 80/20 financing in 2006 for our primary residence in california. We were able to settle the second a couple years ago and stay in our home. We didn't get taxed on the balance we settled (around $55,000) thanks to the Mortgage Forgiveness Debt Relief Act. Our accountant wrote off the balance as "depreciation." Now our value is rising enough that we may be able to sell our place soon and break even or make a tiny profit.

I know that depreciation comes back as some sort of an issue when you sell a rental property, but was wondering if anyone has any experience selling a primary residence that has been depreciated/used the Mortgage Forgiveness Debt Relief Act.

If we sell are we going to get hit with a huge tax bill due to the depreciation? Thanks in advance.
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
26,840
466
1,000
48
Southern California
www.loansafe.org
Hello,

My understanding is that you cannot claim any home depreciation on your taxes for a primary residence. I think what you are referring to is capital gains because you gained income by them settling the 2nd and now the home appreciated. So this would be appreciation.
 

poskeyreunion

LoanSafe Member
Apr 5, 2012
7
0
1
Thanks Moe. I looked over my old tax documents and it appears I was confused. Has nothing to do with the loan we settled. Nevermind.
 

Moe Bedard

Call 1-800-779-4547
Staff member
Loan Safe Mortgage
Aug 10, 2007
26,840
466
1,000
48
Southern California
www.loansafe.org
My pleasure and not a problem. Glad you figured it out. We all get confused sometimes when it comes to this sort of stuff. Good luck!