A client inquires about the tax implications of selling their rental property. They purchased the...
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Accounting
A client inquires about the tax implications of selling their rental property. They purchased the property in for $ and have been claiming depreciation deductions throughout their ownership. They are expecting to sell the property for a significant profit.
There are no additional tax considerations beyond capital gains taxes
They may be subject to depreciation recapture, which could increase their taxable income
They will owe a higher capital gains tax rate due to the depreciation deductions claimed
They will need to pay a penalty for claiming depreciation on a rental property
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