Tax Concepts

Depreciation Recapture

Depreciation recapture is the rule that can tax some prior depreciation benefits when certain property is sold.

Quick answer

Depreciation recapture is the rule that can tax some prior depreciation benefits when certain property is sold.

It matters because the gain on a sale is not always taxed at one simple capital gain rate.

A rental property sold after years of depreciation may trigger both capital gain and depreciation recapture.

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Plain-English Definition

What Depreciation Recapture means

Depreciation recapture is the rule that can tax some prior depreciation benefits when certain property is sold.

Why it matters It matters because the gain on a sale is not always taxed at one simple capital gain rate.
Simple example A rental property sold after years of depreciation may trigger both capital gain and depreciation recapture.
Related Questions

Questions people ask about Depreciation Recapture

What does Depreciation Recapture mean?

Depreciation recapture is the rule that can tax some prior depreciation benefits when certain property is sold.

Why does Depreciation Recapture matter?

It matters because the gain on a sale is not always taxed at one simple capital gain rate.

What is a simple example of Depreciation Recapture?

A rental property sold after years of depreciation may trigger both capital gain and depreciation recapture.

When should I ask a CPA about Depreciation Recapture?

Ask a CPA when the term affects your tax bill, estimated payments, deductions, or a planning move before year end.

How is Depreciation Recapture different from Capital Gains Tax?

Depreciation Recapture means Depreciation recapture is the rule that can tax some prior depreciation benefits when certain property is sold. Capital Gains Tax means Capital gains tax is the tax on profit from selling a capital asset for more than its basis. The difference is that they apply to different tax, accounting, or business situations and should not be treated as interchangeable.

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