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Under rules contained in the current Internal Revenue Code, real property is not subject to depreciation recapture. However, under IRC § 1(h)(1)(D), real property that has experienced a gain after providing a taxpayer with a depreciation deduction is subject to a 25% tax rate—10% higher than the usual rate for a capital gain.
Suzanne Moore, a real estate agent who works with investors at the Central Oregon Investor Network, describes other reasons someone might do a 1031 exchange, “To delay depreciation recapture, to ...
The amount a buyer is likely to pay for a real estate asset (i.e., property). ... You would have to pay a 25 percent depreciation recapture tax on the portion of your profit from previously ...
For real property exchanges under Section 1031, any property that is considered "real property" under the law of the state where the property is located will be considered "like-kind" so long as both the old and the new property are held by the owner for investment, or for active use in a trade or business, or for the production of income.
Important considerations for real estate investors: Depreciation recapture: When selling a depreciated property, investors face a tax called depreciation recapture. This is how the IRS gets paid ...
This property is generally limited to tangible, depreciable, personal property which is acquired by purchase for use in the active conduct of a trade or business. [1] Buildings were not eligible for section 179 deductions prior to the passage of the Small Business Jobs Act of 2010; however, qualified real property may be deducted now. [2]
Commissioner, T.C. Summary Opinion 2004-93 (2004). Other "listed property" is subjected to more limitations, under 168(g), if it is "not predominantly used in a qualified business." 280F(b)(1). [1] If listed property is not used for a qualified business, the accelerated depreciation deductions will be recaptured under 280F(b)(2).
The IRS wants to recapture some of the tax breaks you’ve been getting via depreciation throughout the years on assets known as Section 1250 property. Basically, this rule keeps you from getting ...