So theoretically I could have a $25K loss on ordinary income and then have $20K depreciation that I would have to recapture in 2021 (max tax rate is 25% on recapture I believe). The 25K income loss could result in tax gain of $7500 as that would be less income of $25k?
With 500k cap gain exclusion, what happens if depreciation is for part of year. Tried to rent Oct-Dec 2020 and then Jan-July 2021 so not full year of deprecation. So what happens then as not taking full $20k depreciation/yr x 2 years for $40k. It would be more like $10k in 2020 and 2021???
Not sure if this is correct?
