How is the amount of the tax gain determined?

kelley · Apprentice Joined: 30 Jan 2008 Posts: 1

I have heard something vague about Depreciation Recapture and that there is a lesser amount of tax gain through this method. Do you perhaps know more about how the rules are in regard to this? How is the amount of the tax gain determined and where can I find out more about this?

damien · Apprentice Joined: 29 Oct 2005 Posts: 1

Depreciation Recapture happens when the Internal Revenue Service treats gains made from the sale as an asset as something else than a capital gain. Because the asset that is taxed through Depreciation Recapture by the IRS was previously subject to depreciation, the gains that are made are now treated as ordinary income.

jocko · Apprentice Joined: 29 Nov 2006 Posts: 1

I agree with the previous post, but just wanted to say that Depreciation Recapture is charged at the same rate as income tax. This is a much lesser rate than capita gains tax of course, so the person that gets taxed through Depreciation Recapture benefits from this greatly, it can be argued.

How is the amount of the tax gain determined?

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