@Cavachon1 ,
In general, rented/income property gets a basis reduction by accumulated allowable depreciation ( whether recognized or not). Depending on your other income , rental income. rental expenses etc. you may also have suspended losses. In your computation of gain all these factors will play a role.
This gain will then be divided into two categories --- that portion due to accumulated depreciation will be treated as Ordinary income and taxed at your marginal rate ( Re-capture ); the rest of the gain is treated as capital gain and given capital treatment. Thus the disposition of mixed use property will generally be taxed partly as ordinary gain and partly as capital gain -- priority being ordinary gain ( as re-capture).
Does this make sense ? Is there more I can do for you ?
