Investors & landlords

You will pay tax on 100% of the gain since you do not qualify for the Section 121 exclusion for the sale of a principal residence (i.e., you would not have owned and used the house as your principal residence for at least 2 out of the last 5 years prior to the sale - it was a rental).

 

Consequently, you will pay tax at applicable the long-term capital gains tax rate and, likely, Section 1250 unrecaptured gain (that rate is a maximum of 25%) for depreciation that was allowed or allowable.

 

See https://www.irs.gov/publications/p544#en_US_2018_publink100072661