If I sell my rental property, are capital gains taxes paid when filing next year? I made improvements which increase the cost basis. Do I enter these numbers when filing?

[Carl]

When you sell your rental real estate at a gain, that gain will be taxed in the year you sell it. If the gain is substantial I would recommend you make a quarterly tax payment to the IRS of at least 20% of that gain as soon as possible after closing on the sale. otherwise you may be assessed an underpayment penalty for not having had enough taxes withheld from your total taxable income from all sources during the tax year. Just paying 20% to the IRS as soon as possible upon closing on the sale will keep you from being assessed an underpayment penalty at tax filing time, as well as reduce or eliminate you having to pay taxes at the time of filing.

The general rule of thumb is, if what you owe at tax filing time is more than $1000 or more than 10% of your total tax liability (whichever is higher), then you will be assessed an underpayment penalty.

Also, the same may hold true if your state taxes personal income. So you would want to make a tax payment to your state if applicable also.

Take note that your gains, including recaptured depreciation is added to your AGI in the tax year you sell. So it's very probable that could bump you into a higher tax bracket for that tax year too.

[M-MTax]

Here's the rule for underpayment penalties:::
there's no penalty if you owe less than $1,000 in tax after subtracting withholding and refundable credits, or if you paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.....https://www.irs.gov/taxtopics/tc306