Prices in many real estate markets have regained their pre-financial-crisis levels. Prices in some areas have surpassed those levels and are still going up. That means many real estate investors now own properties that are worth way more than their tax basis. That’s especially likely with a rental property for which you’ve claimed depreciation deductions over the years. Those depreciation write-offs reduced your tax basis in the property, resulting in a bigger taxable gain if you sell.

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