I apologize, but your response has my head turned inside out.
"Yes, you owe capital gains tax on the gain from the sale of the house that was not depreciated. "
If I bought the house at $177K in 2004, depreciate it by $27K, down to $150K. I sell the house for $150K.
I would not owe any capital gains, correct? Given the scenario, I have a gain of $0, correct?
"For the $27K that was depreciated it is recaptured when you sell the house and is taxed at the same tax rate as the rest of your income. "
How does the recapture work exactly? Given my scenario, I sell the house for $150K, why would I be taxed on the $27K loss?
I'm really confused.
