Perhaps this is simple and I'm making it too complicated, but I am selling a rental property and over 17 years I've depreciated it about 100k. My tax rate has grown from the 12% to 22% over the years. My turbo tax effective tax rate has been about 7-12% yearly. Is the IRS really asking me to pay back 25% of the depreciation even when it was really only lowering my AGI by 15% of the depreciation? Am I mixed up in thinking I got a 15% benefit over the years but now I'm required to pay back more than I used?
You'll need to sign in or create an account to connect with an expert.
Perhaps the Capital Gain is being taxed at 25%
Recaptured depreciation is tax as ordinary income on this year's (the year the depreciation is re-captured) return, at whatever tax bracket you are in for that same year.
EXAMPLE:
Yes, it will be taxed as income in the year of recapture, the year it is sold.
You could only defer it with a 1031 exchange, and it is not recaptured if left as an inheritance.
TurboTax explains "Like-Kind Exchange"
But not really just as income, as 25% rate, correct? More than the rate I've been benefiting at.
Perhaps the Capital Gain is being taxed at 25%
Recaptured depreciation is tax as ordinary income on this year's (the year the depreciation is re-captured) return, at whatever tax bracket you are in for that same year.
EXAMPLE:
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
trrsj
New Member
knownoise
Returning Member
obeteta
New Member
taxquestion222
Returning Member
roypimjasmine2485
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.