Yes, the amount on Schedule D will take into account the 25% for amounts that came from the 4797. Any gains will be offset by losses on the Schedule D. There will be a worksheet that actually calculates the tax and the tax tables will not be used if there is an overall gain.
Capital improvements and purchase costs would be part of the cost basis of the house and eligible for depreciation. You would be required to calculate the depreciation that would have been allowed. This would be done by adding these assets to your rental activity, separately from the house, using the original date placed in service for rental and then calculating the selling price for those assets as well. You can use the same example provided in the other post.
And yes, you will lose that depreciation expense because it will be recaptured unless you use Form 3115.
Net Investment Income Tax (NIIT) - The information below will describe how it works and can be compared to your income.
U.S. citizens and residents.
Individuals who have for the tax year (a) MAGI that's over an applicable threshold amount, and (b) net investment income, must pay 3.8% of the smaller of (a) or (b) as their NIIT. The applicable threshold amount is based on your filing status.
•Married Filing Jointly or Qualifying Surviving Spouse is $250,000.
•Married Filing Separately is $125,000.
Single or Head of Household is $200,000.
@Anonymous
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