Capital Gains Tax Questions

[McClain Gitch]

My wife and I purchased a duplex in July 2016, lived in it for 26 months before using it as a full time rental, and sold it in September 2020. Our accountant has stated that because we claimed it as a rental the last 2 years that we would be liable for capital gains. I feel we qualify to avoid it as we lived in it for more then 2 years in the last 5 years. Any advice would be great! Thanks!

[Michael Plaks]

@McClain Gitch

Your accountant is partially correct, assuming you lived in only one of the two units. You had 2 halves: eligible for an exclusion (except for depreciation recapture) on the unit you used to live in and owe taxes on the other one.