USA On what do I pay Capital Gains (sale of rental property).

[Jaes]

30 years ago, I purchase a rental property for $35,000 (land was apprised at 5K and building at 30K). So, I have already depreciated the building (30K) over the 27.5 years ---and, thus, "basis" = $0 (zero). Today, the building appraises at $350,000 (land = 15K and building = $335K), I am going to sell it for the 350K. Multiple Choice Question: Do I pay capital gains on: (a.) 350K (sales price) - 35K (purchase price)? (b.) 335K (apprised value at sale of building) - 30K (appraised value of building when purchased)? (c.) None of the above (explain): ____________. I appreciate any help. --Jaes.

 

[Drmdcpa]

Cap gain is net sales price less basis. Transaction needs to be split between land and depreciable assets. Depreciation portion of gain is recaptured at 25%