Unrecaptured gain, how will I be taxed

[tlfranklin61]

I sold a rental house we owned 11 years, purchased price $150 k,  adjusted basis $161k, sold price $150 k, depreciation $52 k, can someone tell me if my tax on this sale sounds correct? I have  $41 k of unrecaptured 1250 gain ? This will go on my income and I will be taxes at my 15% rate or 25 % rate ?

[DanielV01]

Unrecaptured depreciation gain is taxed at your marginal rate.  Since the tax brackets changed through the Tax Cuts and Jobs Act, it won't be taxed at 25%.  If your marginal rate was 25% last year, the corresponding marginal rate this year will be 22%.

Unrecaptured gain is taxed at your marginal rate because the depreciation reduced your gain (or increased your loss) by your marginal rate at the time you took the deduction.  Tax law requires an equal treatment at the time of sale instead of a capital gains treatment.

There is still a possibility you might not pay tax on this entire amount, however.  If you have any suspended rental losses, losses that you were not allowed to take because of income or other limitations, these will be allowed at the time you dispose of the rental, and reduce the amount of unrecaptured depreciation gain you otherwise will be claiming.

[Zbucklyo]

I am seeing contradictory information on the tax rate for unrecaptured depreciation as a result of the TJCA.  Sometimes I see it as a maximum rate of 25%, other times as a flat rate of 25%.  I might have to work through a hypothetical example in the software.  After running through a hypothetical, and looking at the worksheets, depreciation is recaptured at 25% - not your marginal tax rate.