The capital gains is only one part of the equation. You may have 'depreciation recapture' and you may also have been taxed the additional 3.8% Medicate surtax (Obamacare Investment Tax). See the screenshot below.
IRS
Publication 544 Chapter 3 Depreciation Recapture page 29 Section 1250 property defined. This
includes all real property that is subject to an allowance for depreciation and
that is not and never has been section 1245 property. It includes a leasehold
of land or section 1250 property subject to an allowance for depreciation. A
fee simple interest in land is not included because it is not depreciable. If
your section 1250 property becomes section 1245 property because you change its
use, you can never again treat it as section 1250 property.
The reason you may
have to pay a higher income tax rate than the capital gains rate is because of depreciation recapture.
- You depreciated the building and other assets in years
past.
-
You received the
benefit of a depreciation deduction that offset ordinary income tax
rates (a potential Federal tax savings of up to 39.6%, based on
current 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.
