When you sell certain property, whether personal or real estate, that you have depreciated, and have received a benefit from that depreciation, the tax law may require you to report part of your income (equal to the depreciation you have taken and benefited from) as ordinary income taxed at a higher level than the capital gains tax rate. This is called the recapture of depreciation. Consult your tax advisor as to the possibility of depreciation recapture because it may make a big impact on your after-tax income. In certain circumstances, you may be able to “roll over” your gain on real estate through a 1031 exchange, which can defer your gain further into the future.
About The Author
Garrett Sutton is a corporate attorney, asset protection expert and best selling author of 10 books. He has sold more than 850,000 books to guide entrepreneurs and investors. For more than 30 years, Garrett Sutton has run his practice assisting others in protecting assets and maximizing financial goals. The companies he founded, Corporate Direct and Sutton Law Center, have helped more than 10,000 clients protect assets and incorporate businesses. Garrett is a member of the elite group of “Rich Dad Advisors” for bestselling author Robert Kiyosaki.