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 2019 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: depreciation recapture and capital gain. The $60,000 depreciation is recaptured at a 25% rate, and the remaining $10,000 gain is taxed at the long-term capital gains rate of 15%.

Kevin Owns a Rental Apartment Building That He Purchased Several