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NJ4242
Returning Member

1031 exchange depreciation recapture

I did an exchange with  the new property being less than the old, resulting in a 41k realized gain (boot), after selling expenses.  I entered the 41k as unrecaptured section 1250 gain. However, the federal tax due increased by 12K (29.2%). Isn't the max on recapture 25%?

 

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1 Reply
ColeenD3
Expert Alumni

1031 exchange depreciation recapture

Did it possibly kick in the NIIT? 

 

The gain attributable to the depreciation may be subject to the 25% unrecaptured Section 1250 gain tax rate. Additionally, taxable gain on the sale may be subject to a 3.8% Net Investment Income Tax.

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