Tax owed at sale on depreciation you previously deducted, up to a 25% federal rate.
Depreciation defers tax rather than deleting it. Selling triggers recapture on the deductions taken — unless you keep deferring through a 1031 exchange.
Example: $100,000 of past depreciation can owe up to $25,000 at sale.
FAQ
What is Depreciation Recapture in simple terms?
Depreciation defers tax rather than deleting it. Selling triggers recapture on the deductions taken — unless you keep deferring through a 1031 exchange.