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>>Mont asked: 8 years ago I purchased a condo unit near a university to let a child live in during school, and rent out 3 other rooms in it. I have been depreciating it straight line each year. If I decide to sell soon, do payback depreciation? How does that work?

Assuming you sell at a gain, yes, you essentially pay back the depreciation. Basic idea - Sell price minus basis = taxable gain. The depreciation taken decreases your basis. So let's assume you bought it for $60k and depreciated it for the 8 years, taking $2k per year depreciation (total of $16k for the 8 years). Your basis in the property is now $44k ($60 - $16). If you sell for $75k, your gain is $31k. Note that any fixing up and/or selling costs (commissions, etc) get added to your basis.

Generally it will be capital gain, taxed at the more favorable rates. There are some rules that can cause it to be ordinary income, but these shouldn't apply to you based on your description of the situation.
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