"The first thing you will need is the cost basis of the property, then you subtract the amount of depreciation taken (or that should have been taken) from the original cost basis (including current year's) to arrive at current Adjusted Cost Basis.
Next you need the amount you sold the property for minus any fees or commissions (net proceeds). Take the net proceeds figure and subtract from it the adjusted cost basis to compute Realized Gain.
Compare your realized gain with your depreciation expense; the lower of the two figures is the amount the IRS considers subject to depreciation recapture at your ordinary income tax rate. The remaining amount is taxed at the capital gains rate."
Click this link for more info on how Depreciation Recapture in Sale of Rental Property.
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