Kevin owns a rental apartment building that he purchased several years ago for $100,000. He has claimed accumulated depreciation of $60,000 on this building. In 2018 he sells the building for $110,000. If Kevin is in the 32% marginal tax bracket and has no other property transactions this year, what tax rate or rates apply to his gain from the sale of this building?

Question

Quizplus · Accepted Answer

Kevin's gain is split into two parts: the recaptured depreciation taxed at 25% and the remaining gain taxed at the long-term capital gains rate of 15%.

Kevin Owns a Rental Apartment Building That He Purchased Several