Question

If I sell a rental property, do I have to pay both capital gains and deprecation recapture taxes?

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Depreciation recapture can actually increase the amount of capital gains realized on the sale of property.

Depreciation recapture is assessed when the sale price of an asset exceeds the tax basis or adjusted cost basis.

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Employee

Yes. Capital gains are taxed at the capital gains tax rate, which could be above or below your ordinary income tax rate.

Recaptured depreciation is taxed at the ordinary income tax rate, anywhere from 0% up to a maximum of 25%.

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