I have a rental home that I bought in 2002 for $250k (land value, perhaps $81k at the time?, improvement value of the rest - $169k), I lived in it for 8 years or so, then I put it up for rent on 1.1.2010, and it's been rented since. In late 2021 the renter left the property, and on 1.6.2022 I sold the property for about $342k (after deduction of HUD1 costs like realtor commission, etc. - but not deducting for $3700 in staging furniture fees or $650 in cleaning fees or $350 in inspection / engineering report fees, which were all required to sell the house).
In the years I had the rental property, I used MACRS depreciation, 27.5 year recovery, $6139/year, for the depreciation allowance, for a total 'prior depreciation' of 73412, according to TT22. (One notes that
73412 divided by 6139 is 11.95, and there are 12 years from 2010 to 2022....)
After plugging in my numbers into TT22-P, I'm told that I have the following:
Asset Sales Price 271511
Asset Expense of Sale 34175 [$3700, $350, $650 added here]
Land sale price 105389
Land expense of sale 9601
That part looks fine; sum of the 2 sales prices are the grand total of what I sold the home for, and minus the expenses (and with $3700+650+350 in extra added expense) that's what I actually walked away with at closing, via a check to me.
The point of my confusion: TT says I have a gain on this of $142179, and a land gain of 14613, for a total long term gain of $156,792.
1. Where does it get this? I'm looking at my form Asset Entry Worksheet and it's not completely clear to me why these values were chosen. If my home goes from $250k in 2010 to $345k-ish in 2022, isn't that 95k in gains, total, spread across land and improvement, minus the extra $3700, $350, $650 in other expenses?
2. I thought capital gains was taxed at 15%. Yet before the house sale is figured in, I'm owed $3k or so by the IRS. Once I add the house sale, I owe the IRS around $30k; that's essentially $33k in extra taxes, or about 1/3 of the $95k I see as my long term capital gain. I don't understand this math...
Any thoughts or help available?
