When you sell a rental property, your cost basis is the amount you paid, plus any improvement, minus any depreciation taken. If that calculation for cost basis produces a gain, you will pay two types of tax. One will be the recapture of your depreciation up to the amount of the gain, taxed at 25%. The other will be a capital gains tax on any gain over the depreciation amount, and that could be anywhere from 0-20%, depending on your other income. The final result can be quite complicated to calculate because you would also be able to deduct any losses you have been accumulating over the years of the rental. It would be advisable to file an estimated tax payment in the quarter that you close on the property unless you usually have enough withheld from any W-2s to receivie a large enough refund to cover at least the depreciation recapture tax.