The sale of the rental property and any taxes due will be calculated when you file your 2024 taxes. You might want to make some estimated tax payments throughout the year, once the property is sold. Since you have owned the property you will qualify to use the long-term capital gain. To calculate your gain you will have to calculate your basis for the property, all of the following are included in your basis:
- Your original purchase cost
- The costs of any improvements that were made to the property
- Closing costs, like title insurance, and recording fees
- Depreciation recapture
Your AGI includes all income from all sources and when your tax is calculated, it will be a combination of all the income you had for the year. Your total income will affect how much tax you pay on the depreciation recapture because, unlike capital gains, it is taxed at an ordinary tax rate. For more information see the following:
