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If you have used part of your home as a home office, you haven't been using that part of your home as a principal residence at the same time. Fortunately, you don't need to allocate the basis of the property and the amount realized between the business portion of the home and the residential portion. However, gain must be recognized to the extent of claimed depreciation.
The rule is different when a separate part of the property was used for business purposes or rental income. For example, this situation would occur if the individual owned an apartment building and lived in one unit and rented out the other units. Generally, if the separate part of the property is used for business or rental purposes in the year of sale, the individual must treat the sale of the property as the sale of two properties (i.e., a residence and business or rental property). The sale of the business or rental portion of the property is reported on Form 4797, Sales of Business Property.