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Selling a Rental Property? Don’t Forget Depreciation Recapture
Depreciation recapture can be a complex tax consideration for real estate investors. Understanding how it works is crucial when selling rental properties. Investors must calculate both the depreciation recapture portion and the capital gains portion of their gains. The recapture portion is taxed at up to 25%, depending on their income, while long-term capital gains may be taxed at 0%, 15%, or 20%. High earners might also owe an additional 3.8% Net Investment Income Tax.
