“We are having to pay a 25% recapture rate for the depreciation now which after all the calculation is $14257.... but in the 11 years that we took the depreciation we were only in a 15% tax bracket. Am i wrong or are we getting screwed???”----->It depends; a special 25% tax rate applies to real pty. Gains attributable to depre previously taken and not already recaptured under sec 1245/1250 rules. Any remaining gain attributable to unrecap depre previously taken, including S/L depre, is taxed at 25% rather than the LTCG rate of 0~15% for 2012. When your ordinary tax rate is only 10~15%, the depre recap will be taxed at 10 or 15% to the extent of the remaining amount in the 10 or 15% bracket and then at 25%.
“Also 2012, is the first year we are in a higher tax bracket because I went back to work after being a stay at home mom for 9 years.”--->As described above.