Question: Five years ago you purchased a small apartment complex for $1 million. You borrowed $700,000 at 7 percent for 25 years with monthly payments. The

Five years ago you purchased a small apartment complex for $1 million. You borrowed $700,000 at 7 percent for 25 years with monthly payments. The original depreciable basis was $750,000 and you have used 27 1/2- year straight-line depreciation over the five year holding period. Assume no capital expenditures have been made since acquisition. If you sell the property today for $1,270,000 in a fully taxable sale:

Over the entire five-year holding period, how much were your taxes from rental operations reduced by the annual depreciation deductions? Ignore the increased taxes due on sale

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