With the wild run up of property values, I have had a rash of clients selling rental properties. The offers were just too good to refuse.
When I go over the gain calculation they are startled. They are thinking I sold for $500,000, I paid $200,000 I pay tax on only $300,000.
Never mind that they rented the place for 14 years and have benefitted from $100,000 in depreciation.
Unless you are doing a 1031 exchange another issue all together, the gain will taxed at $400,000 not $300,000. They need to add back the recognized depreciation for the gain calculation.
This is a surprise to a number of clients. So, beware that the sale of a business property in not so clear in the gain calculation.