1,250,000. The taxable basis of the home was reduced to $600,000 ($750,000 − $150,000) due to the depreciation deductions. The capital gains on the sale is $2,000,000 − $600,000 = $1,400,000. Of the $1,400,000 in capital gains, $150,000 is taxed at the standard federal tax rate, while $1,250,000 will be taxed at the long term capital gains rate. The $150,000 constitutes recaptured depreciation.