If you sold your rental in 2020, see I sold my rental property. How do I report that?
You may have to pay 25% on your Depreciation Recapture. When you sell a rental, in addition to capital gains, you may have Depreciation Recapture. If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if otherwise nontaxable) as ordinary income.
- You depreciated the building and other assets in years past.
- You received the benefit of a depreciation deduction that offset ordinary income tax rates.
- The government is not going to grant the most favorable capital gains rates on the portion of the gain relating to these prior depreciation deductions.
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