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We are in the process of selling a rental property on which we should have about $40K in capital gains, (selling price - recent fix up costs - realtor fees - transfer taxes- original purchase price,) and about $32K in depreciation that needs to be recaptured.

We are carrying a substantial amount of capital losses from stock that we can realize to offset the $40K in capital gains. We also probably have enough losses to offset the depreciation recapture. Can that be done, or are we stuck for the roughly $8,000 in taxes on the recaptured depreciation?

TIA,

InParadise
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We are carrying a substantial amount of capital losses from stock that we can realize to offset the $40K in capital gains. We also probably have enough losses to offset the depreciation recapture. Can that be done, or are we stuck for the roughly $8,000 in taxes on the recaptured depreciation?

Your stock losses can offset both the capital gain and the depreciation recapture on the sale of your rental property. You'll offset the capital gain portion first, then the depreciaton recapture.

--Peter
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Your stock losses can offset both the capital gain and the depreciation recapture on the sale of your rental property. You'll offset the capital gain portion first, then the depreciaton recapture.

Great news! Thanks Peter! Off to find the regs.

InParadise
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