The gain from the sale of your rental property will be long-term capital gain. The tax brackets for long-term capital gain are based on your taxable income, not total income. But the capital gain on the sale is included in your taxable income. Taxable income is total income minus adjustments (if any) and either the standard deduction or itemized deductions.
For 2023, married filing jointly, the tax rate on long term capital gain is 0% for taxable income of $89,250 or less. The $83,000 figure (actually $83,350) was for 2022. For 2024 it's $94,050.
With a basis of $5,000, if you sell the property for $200,000 your gain will be $195,000. Repairs do not increase your basis or reduce your gain. (Improvements are added to your basis, but not repairs.) So the gain on the sale alone will put you well over the $89,250 cutoff for the 0% bracket. Depending on your other income, a large portion of the long-term capital gain on the sale of the property will fall in the 15% bracket.
Also keep in mind that your taxable income will be increased because you have to recapture depreciation that you claimed or could have claimed. The depreciation recapture is ordinary income, not capital gain. But if you only paid $5,000 for the land and building, the depreciation would not be much.
