Depreciation recapture comes from a straightforward principle: if you claimed tax deductions for an asset based on depreciation, but later sold it for more than its book value, then it was worth ...

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%, ...

How to Calculate Depreciation Recapture. For tax purposes, depreciation reflects the recognition that certain assets, particularly company equipment, tend to lose value over time.

Depreciation recapture is assessed when the sale price of an asset exceeds the tax basis or adjusted cost basis. The difference between these figures is thus "recaptured" by reporting it as income.

The depreciation recapture for equipment and other assets, however, doesn’t include capital gains tax. But you should understand exactly how depreciation works before we delve deeper into recapture.

The depreciation recapture should be figured into any selling scenario. Fully understanding your tax liability upon the sale of the property could make or break the selling decision.

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, ...

Depreciation recapture: The $150,000 in depreciation is recaptured and taxed at up to 25%. Remaining capital gain: The remaining $200,000 gain is taxed at the standard long-term capital gains rate ...

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