Shanstella bought a 4-unit apartment building in July 2006 for $360,000 and sold it for $480,000 in 2015. There was $96,541 of accumulated straight-line depreciation on the apartment building. Assuming that Shanstella is in the 33% tax bracket, how much of her gain is taxed at 25%?

Question

Quizplus · Accepted Answer

The gain taxed at 25% is the amount of accumulated depreciation, which is $96,541. This is because the IRS requires recapture of depreciation at a 25% rate.

Shanstella Bought a 4-Unit Apartment Building in July 2006 for $360,000