Depreciation Recapture: The Hidden Tax After a Sale

If you’ve claimed depreciation on rental property, part of that deduction must be “recaptured” when you sell.

How It Works:

• The IRS taxes prior depreciation at a 25% rate.

• Applies to rental or investment property, not primary homes.

Strategy:

• Plan for this tax before selling.

• Consider a 1031 exchange to defer it.

💡 Key Takeaway: Depreciation helps during ownership — but plan for recapture before the sale.

⚠️ This blog is for informational purposes only and does not constitute tax, legal, or accounting advice. Please consult your CPA for guidance specific to your situation.