@DianeW777 - Thank you again. I ran a simulation in TT Desktop and assumed that I sold the rental property last year. First, I see the accumulated depreciation is removed from the cost basis on Form 4797 (Line 22). Then I see that it all gets (Sale minus Adjusted Cost Basis) to Line 24 (Total Gain). Then along with "Land" value gain - it all goes to Line 11 on Schedule D, which is LT gain. Here is where my confusion is as I do not see separate treatment for just depreciation recapture to be at up to 25% tax rate. However, I see Line 19 in Schedule D (depreciation recapture minus ST losses) - is it where it is taxed at up to 25% tax rate? A bit confused.
Also, I see that rental house sale triggers NIIT which is unfortunate...any advice?
Regarding closing costs when I bought the house: if I forgot to include them in the cost basis when I bought the house - do I really lose anything? Understood that I could have depreciated closing costs but in the end I would still have to pay tax savings back as part of depreciation recapture? I can still add closing costs to the cost basis when I sell the house to lower gain. Is that correct?
What about house improvements - if I forgot to depreciate them - can I add them to cost basis at time of sale to lower gain? For refi costs not yet amortized - do I add them to the cost basis?
Thank you
