@taxquestion222 wrote:
So if I understand correctly, the depreciation recapture gets subtracted from “profit”? Is the entire recapture subtracted, or just the % paid on it.
Accumulated depreciation (i.e., the total of all of the depreciation deductions you have taken or should have taken over the years) lowers your adjusted basis; it's not just the percentage you paid.
Example (ignoring improvements):
Cost basis (purchase price): $1,000
Total depreciation deductions: $400
Adjusted basis = $600
Sales price (less selling expenses): $2,000
LESS adjusted basis: $600
Gain = $1,400 ($400 of which is depreciation recapture)
