The property was purchased in 1976 or so in Calif for about 50k ( - now the land value only - is about one million).
80% of the property purch value (50k) or about 40k was depreciated straight line because it was regarded as the rental portion.Question - assuming no complications - and nothing fancy - will be the tax rate be 25% on the 40 k recapture - if sold today?
What could cause it to be less than 25%?
m
The ordinary tax rate being less than 25%.
-Mark Bole
Could it also be more then - if my ordinary tax rate is higher than
25%?
Can that happen with $1 million in capital gains?
Seth
Sure. The amount subject to tax at ordinary rates is the total taxable income less the capital gains (not including the amount subject to the 1250 recapture). If the sale of the property was the only thing that happened this year, the $40K recapture less MFJ with no kids would result in about $2,513 in tax (6%). And since they would be still below the top of the 15% bracket, they would even get some of the real LTCG taxed at 0%.
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