I am planning for the sale of a rental property and estimating that a significant amount of the long term gain will actually be considered depreciation recapture and thus taxed at an ordinary income rate up to 25%. I am wondering however whether this amount of depreciation recapture will also contribute to the calculation of what federal income tax bracket I fall into for the purpose of determining long term capital gains rate for the rest of the gain on the sale. Because the depreciation recapture is significant, I am concerned that my long term capital gains rate for the sale could be bumped up to a higher bracket if the depreciation recapture amount contributes to the determination of my federal income tax bracket. Any experience or advice in this area would be highly appreciated. Thank you!
