when calculate ERAT, ERAT= selling price – selling cost – mortgage balance – taxes on sale Taxes on sale include tax on capital gain and recaptured depreciation here, tax is t*(capital gain- recap depre.)? how dose recap. depre. work? Thanks.
I remember there may be 2 different tax for capital gain and recapture. I think it is Tcap * capital gain + Trecap * recap.dep. Since you have deducted some tax which you should not have because asset appreciates, now you have to pay those tax back.