Taxation of Unrecaptured Section 1250 Gains

[Will B.]

Hello!

Set of facts:

- Lived in a residential unit as a primary residence for a number of years.

- Converted to rental and depreciated it for 2 years.

- Sold in 2023.

- Purchase price: $250k

- Sale price: $350k

- Depreciation: $9k => Roughly ( ($250k*.50)/27.5yrs) *2yrs)

- 2023 marginal bracket: 32%

What is the proper taxation?

My work shows that the $100k is a Section 121 exclusion and leaves $0 tax owed.

The $9k depreciation recapture is tricky. I've filled out the 1040 Schedule D Tax worksheet 3 times and each time have come back with it being taxed at the marginal rate of 32%, with no particular special treatment, based on the flow of that worksheet I don't see how it could be any other way.

I have read many, many, many, many, many threads on this forum mentioning the recapture being taxed up to 25%. Has tax law changed recently or am I not filling out a form correctly?