Depreciation recapture is the process by which the IRS reclaims tax benefits previously obtained through depreciation when an investor sells a depreciable asset for more than its depreciated value.

Depreciation recapture: The $150,000 in depreciation is recaptured and taxed at up to 25%. Remaining capital gain: The ...

If the tractor had sold for $70,000, then there would have been depreciation recapture of $50,000 and Section 1231 gain of $20,000. This gain is usually taxed as long-term capital gains, ...

Continue reading → The post How to Avoid Depreciation Tax on Rental Property appeared first on SmartAsset Blog. It can pay to be a responsible rental property owner.

IRS Section 1245 determines how certain types of property are taxed upon sale. Specifically, it deals with recapturing depreciation on personal property and specific kinds of real estate. When ...

Depreciation recapture: When selling a depreciated property, investors face a tax called depreciation recapture. This is how the IRS gets paid the taxes you didn’t pay when you depreciated the ...

In typical real estate investments, depreciation can reduce taxable income, but when the asset is sold, the IRS usually requires a "recapture" of that depreciation, taxing it as ordinary income.

Depreciation Recapture Rates Ordinary Income Tax Rate. The ordinary income tax rate is typically applied to depreciation recapture on most properties. This rate can be as high as 37%, ...