You take your original cost, add in any capital improvements you have made and subtract the depreciation you have taken. As you are aware, this becomes your tax basis. You then take the sales price that you sell the rental for, subtract your sales costs, subtract your tax basis and the final number then becomes your gain. You then compare your gain to the total depreciation that you have taken. To the extent of the depreciation taken - your gain is taxed at 25%. The amount of the gain that exceeds the depreciation taken is taxed at a rate of 20%, the standard capital gains rate. Hope this helps.
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