We Prepare Tax Returns!

We prepare most type of tax returns:

Individual. 

S Corporation.

C Corporation.

Partnership.

Payroll.

Amended.

Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

Client Video Testimonials

Click here to watch some of our clients in their video testimonials!

Client Testimonials

"If your company could use help from an experienced CFO, Gary's your man."

Dr. David Marcincko

Free Consult

Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

Pay Your CPA

Enter $ Below



Other Amount:



Your Email Address :



Form 8825 CPA advises planning when selling depreciated Rental Property | Schedule E | Capital Gains

Form 8825 CPA discusses rental property sale tax consequences \ Schedule E

Gary Bode, CPA: it pays to calculate your potential Capital Gain if you plan to sell depreciated rental property. (910) 399-2705.

Form 8825 CPAs sometimes see clients get stung on Capital Gains tax when selling their rental property. Why? Recapture of prior depreciation factors into the Capital Gain (Loss) calculation. Happens with Schedule E rental property too of course.

The example below uses a residential piece of rental property. It ignores land and building segrgation, just to keep things simple. Residential rental property uses straight line depreciation with a 27.5 year life. So, every year you get to deduct 1/27.5th of the purchase price as depreciation.

An Example of Capital Gain calculation on the sale of Rental Property on Form 8825 and Schedule E

Let’s say you bought rental property 10 years ago and sold it today:

  • Purchase Price: $275,000.
  • Prior Depreciation: $100,000 [($275,000/27.5 years) x 10 years].
  • Sales Price: $275,000. You broke even right? Not for IRS tax purposes.
  • Capital Gain: $100,000 [$275 sales price – $275 cost + $100 recaptured depreciation] Ouch.
  • Capital Gain tax: $15,000 (but who knows what that will be in 2013).

The Capital Gain tax consequence of selling depreciated rental property sometimes shocks clients. Planning isn’t always straight forward in the Recession.

I’m a Form 8825 CPA with a virtual office to serve you where ever you live. I have dozens of posts on this website on Form 8825 and Schedule E topics. I have extended family that own rental property. So I have to keep current with changing tax regs. We offer a free phone consult. (910) 399-2705.

Find me on Google+

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>