Section-8 No Additional Depreciation Recapture at Ordinary Income rate on Sale

[Robert Steele]

I just stumbled upon this. Another plus for section-8 rentals. Albeit a small one.

From the IRS:

The applicable percentage used to figure the ordinary income because of additional depreciation depends on whether the real property you disposed of is nonresidential real property, residential rental property, or low-income housing. The percentages for these types of real property are as follows.

Low-income housing. Low-income housing includes all the following types of residential rental property.

Low-income rental housing held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under provisions of state or local laws that authorize similar subsidies for low-income families.

The applicable percentage for low-income housing is 100% minus 1% for each full month the property was held over 100 full months. If you have held low-income housing at least 16 years and 8 months, the percentage is zero and no ordinary income will result from its disposition.