Glossary · Property & Estate
Depreciation Recapture
Depreciation recapture is US tax on the depreciation previously claimed (or claimable) on a rental property, charged at up to 25% when you sell. It applies even if the Section 121 exclusion shelters the rest of the gain.
In more detail
US rules require residential rental property to be depreciated, reducing taxable rental income each year. On sale, that depreciation is recaptured and taxed at up to 25%, separately from other relief. Because US rules treat depreciation as taken whether or not it was claimed, a landlord who never knowingly depreciated can still face recapture — getting neither the yearly deduction nor an escape from the charge.
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