Sale of Rental
A client has placed a rental house she owns on the market. Concerned the sale would fall under the recapture rules I checked the date the house was set up for depreciation and see it was in 1998. After reading the rules earlier today it looks to me that it will not. Assuming it is sold this year I expect I will use it's depreciated basis which will surely produce a hefty capital gain and since I have not needed to handle one of these in years want to check to see if my assumption is correct.
To answer Christian so that he may make sense of how this should be reported:
Christian, because your client used MACRS SL deprec, you are correct that there is no recapture of excess depreciation like happens with sec 1245 tangible property. That would be where that portion of gain is split out and the recapture portion is taxed at ordinary rates. That is NOT what is happening in your case.
What is happening - when real property is sold (sec 1250 property) that has been depreciated, t
