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Updated almost 6 years ago on . Most recent reply
Depreciation recapture
Hi all. I'm a bit confused on this issue as I read about depreciation recapture being taxed as "ordinary income" then I see mentions of a "flat 25% rate". I have a 3 part questions:
- So will the rate depend on your tax bracket like ordinary income or is it a flat 25% tax? (asking because I'm in a low tax bracket, not because I'm worried about paying a higher than 25% rate)
- If a 1031 is used to exchange down, how is the depreciation allocated? (are the deferred and payable portions directly proportional to the values of the relinquished and replacement properties?)
- Is depreciation recapture in fact avoided entirely if an investment property is sold at a loss or breakeven?
Thanks in advance,
Payman
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