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hrse:


>>"But you owned the asset the whole time."

> And paid income tax on the annual rent.

This stems from the original situation you posted...
Say I bought a rental house for $100,000 in 1990.

I pay taxes on the net rental income each year.

In 2019, because I am older, DIY projects are harder to do, and Covid, I sell the house for $300,000 net of sales costs.

Do I have real capital gains of $200,000 and what amount should I be paying in capital gains taxes? <

"I am asking from a place of true ignorance. But would your capital gains be from $200,000? Doesn't that imply that you have not depreciated the cost of the asset at all during the 30 years?

Asking because I really don't know."


I am not a tax expert or tax pro, but ass I understand it (1) depreciation taken or that could have been taken will need to be recaptured, (2) deprecation would have been based upon the value when placed in service (when i first leased in the example I posted), and (3) land cannot be depreciated, so the 100k purchase price would have to have been allocated between land and improvements.

So depreciation to be recaptured would need to be less than 100K.

One of the resident tax pros can correct me I am wrong in my uderstanding.

Regards, JAFO
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