Depreciation only on the years you rented out? Or all years?
I have a townhouse and I am planning on renting out one of the bedrooms. I know I have to report this and to take the depreciation exemption. I plan on doing this for the next few years. It is also my primary residence. In other words, I am not using the entire property as an investment property. I just plan on renting a room out for a few years until I get a better job.
However, I am hesitant to do this for two reasons:
1. I heard that once you do this you will always have to pay capital gains tax on the property when you sell. Is this true? I don't want this to be a rental property. This is my home first and foremost. If, say, 15 years from now I have to pay a capital gains tax on a property where I only rented a room out for a couple of years, that would be awful.
2. When you have to pay the 25% recap on depreciation when you sell the house, do you only pay for the years you rented out? Or do you have to pay depreciation on every year you owned the house afterwards, even if you were not claiming the depreciation after you stopped renting out the room?
Thank guys.