I do not think there is 'double' capital gains.
The rental property has been sold. You have allocated the selling price of the property over the rental structure and the rental property land as well as the other rental property improvements.
As an example, your rental property assets may be represented by the following:
Basis Sales Price Gain
Rental property structure 190,000 228,000 38,000
Rental property land 10,000 12,000 2,000
Roof replacement 25,000 30,000 5,000
Kitchen remodel 25,000 30,000 5,000
Total cost basis 250,000 300,000 50,000
You will allocate the $300,000 selling price over the $250,000 cost basis for the entire asset. There should be no 'doubling' of capital gains.
The amount of the gain will be spread over different types of assets (land, buildings, improvements, etc.) which allows for different tax treatments for the different kinds of assets.
@illinette2012
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