technically $50K gets taxed at the capital gain rates
"Unrecaptured" section 1250 gains — that is, gains on real estate due to straight line depreciation — have their own tax rates of 25% or 15% (depending on the owner´s tax bracket) rather than the 5%-15% capital gains rates. (so you don't pay both the capital gains tax on the 80 and then 1250 recapture tax on the 30)
one way to see the taxes on the 80 gain is to complete your return without reporting the sale and then report the sale.
another method is to review the section 1250 recapture worksheet and the capital gain and qualified dividend worksheet.
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would you prefer no depreciation deduction be allowed then you would have a gain of 50
during the years of ownership, you got to deduct and thus reduce your income taxes for the depreciation.
But depreciation lowers tax basis so you now have that depreciation come back as income
so over the years
50 of income for the excess of the sales price over the original cost
-25 the tax deduction you got for depreciation over the years
+25 for depreciation recapture
Thus the net is 50 the same amount as if depreciation was never taken
depreciation never costed you any cash out of pocket strictly a tax and accounting concept.
