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res0me5h
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What are the tax penalties/repayment when I sell my rental property? How can I avoid penalties?

 
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What are the tax penalties/repayment when I sell my rental property? How can I avoid penalties?

The direct answer to your direct question - now that we know that you're talking about depreciation recapture - is "you can't" except if you properly do a Sec 1031 ("Starker") exchange.

https://www.washingtonpost.com/realestate/starker-exchange-lets-you-defer-capital-gains-taxes-on-inv...

Of course that really doesn't "avoid" the recapture, but it does delay it.

Tom Young


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7 Replies

What are the tax penalties/repayment when I sell my rental property? How can I avoid penalties?

Tax penalties?  Don't think there are any.  You have to pay tax on the recaptured depreciation and on any gain if you sell it for more.

What are the tax penalties/repayment when I sell my rental property? How can I avoid penalties?

What penalties or repayment are you referring to?  Did you not report the rental property income or depreciation for prior tax years?
res0me5h
New Member

What are the tax penalties/repayment when I sell my rental property? How can I avoid penalties?

"Penalties" was obviously an incorrect word.  I should have said repayment against prior year depreciation deductions.... Thanks.
res0me5h
New Member

What are the tax penalties/repayment when I sell my rental property? How can I avoid penalties?

So the only 'relief' I may get is if I use the rental as my primary residence for 24 months?

What are the tax penalties/repayment when I sell my rental property? How can I avoid penalties?

Depreciation will still be recaptured.
res0me5h
New Member

What are the tax penalties/repayment when I sell my rental property? How can I avoid penalties?

Thanks, Tom!  Your info was REALLY helpful!

What are the tax penalties/repayment when I sell my rental property? How can I avoid penalties?

The direct answer to your direct question - now that we know that you're talking about depreciation recapture - is "you can't" except if you properly do a Sec 1031 ("Starker") exchange.

https://www.washingtonpost.com/realestate/starker-exchange-lets-you-defer-capital-gains-taxes-on-inv...

Of course that really doesn't "avoid" the recapture, but it does delay it.

Tom Young


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