Depreciation Recapture 2019-05-17 08:00:00

Depreciation Recapture

Depreciation recapture is the USA Internal Revenue Service (IRS) procedure for collecting income tax on a gain realized by a taxpayer when the taxpayer disposes of an asset that had previously provided an offset to ordinary income for the taxpayer through depreciation deductions.

For example, assuming a depreciation recapture rate of 25%, if an investor claimed $100,000 in aggregate depreciation allowance over the holding period of an investment property, then upon sale of the asset, the investor may be subject to $25,000 in depreciation recapture tax. However, as with capital gains taxes, depreciation recapture may be deferred by via a 1031 exchange.

 


The 1031 Investor's Guidebook

Download The Guide To 1031 Exchange

Tackle the art and science of completing your 1031 exchange.

Capital Gain Tax Rates by State

View View the Capital Gains Tax Rates by State