That latter is worth repeating:even if you don’t actually claim depreciation while owning the rental property, you stillowe depreciation recapture on the amount you were allowed to deductas the depreciation expense.Many real estate investors get this wrong, thinking they don’t owe depreciation re...
The amount and type of depreciation recapture can vary depending on whether the property is classified under Section 1245 (personal property such as furniture and equipment) or Section 1250 (real property such as commercial buildings and structural components) of the tax code, and ...
In that case, it’s typically the property’s value at the time of its conversion to a rental property. If you get too aggressive on estimating the building value and deducting for depreciation, remember that you’ll owe taxes on depreciation recapture when it comes time to sell! Finally, ...
and they’re caught off guard by the higher-than-expected tax bill. To help avoid this, the following discussion provides an overview of the depreciation recapture rules