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Updated over 7 years ago,

User Stats

246
Posts
70
Votes
Tricia O'Brien
  • Investor
  • Anchorage, AK
70
Votes |
246
Posts

Depreciation - paying back after sale of a rental?

Tricia O'Brien
  • Investor
  • Anchorage, AK
Posted

I am trying to understand how much depreciation I will have to pay back to the IRS if I sell my single family rental home that has been a rental for 5 years. Is it the full cash amount I depreciated or the amount of depreciation multiplied by my effective federal tax rate? Hoping someone can help!  For example, I'll use these approximate  numbers to explain:

Cost basis of building: $135K

Depreciation;   $6K per year

Period of Use as a rental:  5 years

Total Depreciation: $30K

If I sell it now at a profit and my effective federal tax rate in the year of sale is 20%, what do I owe the IRS for depreciation?  $30K OR  $30K  x 0.20 = $6K  ?

Any replies would be appreciated!

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