Your taxable gain would be the sale price ($250K) minus your adjusted basis (purchase price $200K + $10K improvements = $210K), so $40K is correct.

The real beauty of real estate is that you can benefit from appreciation while also using depreciation to reduce your taxable income.Other powerful concepts many investors miss include strategically timing capital gains to be offset, leveraging 1031 exchanges, and using creative financing strategies to keep your portfolio growing.And like Janet mentioned, it really depends on several moving parts, your other income sources, where you are in your investment journey, and what other investments or businesses you have.

A charitable contribution (like Jason also mentioned), especially through a donor-advised fund, can also lower taxable income while supporting causes you care about.

@Adam Danes This situation is common for investors who minimize taxable income.

We would like to transfer the $875k into a taxable brokerage account by dollar cost averaging over 10-12 months. 

When the property is sold, the depreciation recapture rules will apply, reducing your tax basis and potentially increasing your taxable gain.This sounds like it is straight out of chat gpt and does not answer my question. 🤣 

And I'm a HUGE proponent of building up large taxable accounts as they give you a crazy amount of flexibility both before, and during retirement. 

Running an Airbnb or short-term rental can be an incredible cash flow machine — but it can also turn into a tax nightmare if you don’t know the rules.Here’s the good news: the IRS treats short-term rentals differently from traditional long-term rentals — and if you structure things right, you can unlock powerful deductions, reduce taxable income, and keep way more of your profit.So, let’s talk about the Airbnb tax secrets every host should know in 2025.1.

Flipping now makes the profit taxable as regular ordinary income, not capital Gain, and you cannot do a 1031 either.This post does not create a CPA-client relationship.

Essentially, you can't split the (taxable) profit 50/50 as that does not match the economics of the transaction.