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New Member
posted Jun 3, 2019 1:29:53 PM

How does depreciation recapturing work if I sell a rental property?

What are the tax rates ? Will it still apply if I do not claim depreciation while I own the property? Does it apply to Non resident aliens?

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1 Best answer
Level 9
Jun 3, 2019 1:30:01 PM

As the link above shows, if you sell the home at a "Gain", the depreciation that you were eligible to claim is taxed at your regular tax rate, up to 25% (plus State taxes).  It is taxed even if you did not actually claim the depreciation.

Yes, it applies to Nonresident Aliens.  Just be aware that TurboTax is not able to do tax return for Nonresident Aliens.

7 Replies
Level 15
Jun 3, 2019 1:29:54 PM

Is this related to your other 2 questions?

New Member
Jun 3, 2019 1:29:57 PM

It's a separate topic related to depreciation

Level 15
Jun 3, 2019 1:29:58 PM

You still have to recapture depreciation that you SHOULD have taken. And all of your questions are related to the same issue: the rental property.

New Member
Jun 3, 2019 1:29:59 PM

What about the recapture tax rates?

Level 15
Jun 3, 2019 1:30:00 PM
Level 9
Jun 3, 2019 1:30:01 PM

As the link above shows, if you sell the home at a "Gain", the depreciation that you were eligible to claim is taxed at your regular tax rate, up to 25% (plus State taxes).  It is taxed even if you did not actually claim the depreciation.

Yes, it applies to Nonresident Aliens.  Just be aware that TurboTax is not able to do tax return for Nonresident Aliens.

Level 15
Jun 3, 2019 1:30:05 PM

You are required by law to depreciate rental property. Then when you sell the property all depreciation is recaptured and taxed at a minimum rate of 15%.  It can (and usually does) go higher.

If you do not claim deprecation as required by law, then when you sell the property you must reduce your cost basis by the amount of deprecation you *should* have taken, which means you're paying taxes on it anyway. In my opinion that's double taxation. But it's the law, and my opinion doesn't change that.