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TaxRobin
TaxRobin, Tax Preparer
Category: Capital Gains and Losses
Satisfied Customers: 15014
Experience:  15+ years in Tax preparartion as well as Instructor for tax law, theory, and application
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How does one compute capital gains on rental housing?

Customer Question

how does one compute capital gains on rental housing?
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  TaxRobin replied 1 year ago.

Hello

The gain or loss is the difference in the cost (less depreciation and plus the improvements) and the sale price (less costs to sell).

Report the gain or loss on the sale of rental property on Form 4797, Sales of Business Property. Individuals typically use Schedule D (Form 1040), Capital Gains and Losses, together with Form 4797.

The depreciation claimed over the past years is subject to "recapture rules," which means you report some of the gain when you sell the property at ordinary income tax rates and some of the gain at capital gain tax rates.

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Expert:  TaxRobin replied 1 year ago.

Please advise if you need more information

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