Taxes on selling rental property

[Stacy Hull]

I am trying to help my mother sell her rental house.  It has just become too much for her to handle.  I am worried about the taxes that will be due when we sell.  She paid 90,000 cash for it 5 years ago so it has 5 years of depreciation. We have put in around 10000.00 in repairs to bathrooms and plumbing.  We are also thinking about putting on vinyl siding before putting it on the market but not sure if it will help with tax costs.  I need help in determining what type of taxes we would be looking at and if there is anyway to minimize those.  She does not wish to purchase another house at this time.  We can maybe sell the house for 90000 to 95000.

[Brandon Hall]

@William Allen nice job on the analysis! Once change to the calculation of gain:

Sales Price: $100k
Closing Costs: $10k
Net Sales Price: $90k

Basis: $75k ($90k purchase + $10k improvements - $25k depreciation)
Gain: $15k

The key here however is that since the total gain does not exceed the total depreciation taken, the gain is considered Unrecaptured Section 1250 Gain (instead of capital gain) which is fancy terminology for depreciation recapture. Here, the gain of $15k is likely taxed at 25%. 

Again, nice job on this!!