Help determining depreciation recapture

[Jim Hwang]

Hi all,

I've struggled for weeks to get a definitive answer to this, and am hoping the magic of the BP community comes through here: how do I calculate a rental property's total depreciation amount from which 25% will be taxed as recapture?  Below is the link to a spreadsheet template I found (credit to Coach Carson's YouTube channel), with my actual numbers entered.  Line 12 is the mystery- one CPA estimated 56K, but I got 140K by taking the purchase price X 70% (land was the other 30%), then dividing by 27.5 and lastly multiplying by the 17 years I owned the property.  I'd appreciate any feedback!  https://docs.google.com/spread...

[Michael Plaks]

@Jim Hwang

You should not need to calculate it. It should be clearly shown in your tax software depreciation schedules as "accumulated depreciation."

If you believe this number is incorrect, then you have a complex problem that requires an accountant specializing in real estate.

Also, depreciation recapture is not 25%. It is capped at 25%, so it could be less. And, most importantly, the actual tax impact of the sale of this property on your bottom line is very complicated, and you have no way of estimating it by taking 25% against the prior depreciation, even if you have the correct number for accumulated depreciation.

I feel that you're trying to achieve the impossible: figure out how much you will owe on this sale by crunching numbers. The only way to have a reliable estimate is to run your entire tax situation through tax software or, better yet, have your accountant do it for you.

PS. Most BP people will not click on any link to someone's Google drive for security reasons. I certainly won't. Share screenshots if you need to show your spreadsheet.