377. You Can't Escape Depreciation Recapture (But Here's How to Defer It)

About this episode

This episode discusses how depreciation recapture works when selling rental properties and strategies to defer it.

What happens when you sell a rental property after taking depreciation deductions? Many investors are shocked to learn they may owe more than just capital gains tax. In this episode, Thomas Castelli and Nate Sosa break down how depreciation recapture actually works, including the three different tax “buckets” investors need to understand: Section 1245 recapture, unrecaptured Section 1250 gain, and Section 1231 capital gains. They explain how bonus depreciation, cost segregation studies, and qualified improvement property impact your taxes when you sell and why accelerated depreciation can still make sense despite future recapture. If you own rental properties, short-term rentals, or commercial real estate, this episode will help you understand what taxes to expect when exiting a deal and how to plan ahead to minimize them. To become a client, request a consultation from Hall CPA, PLLC at go.therealestatecpa.com/3KSEev6 Get the FREE Ultimate STR Tax Strategy Bundle: go.therealestatecpa.com/strbundle Submit your question for Tom & Nathan: go.therealestatecpa.com/question The Tax Smart Real Estate Investors podcast is for general information purposes only and is not intended to…

People in this episode

Guests: Thomas Castelli, Nate Sosa

Topics covered

• depreciation recapture
• tax planning
• rental property sales
• capital gains tax
• real estate investing

Keywords

• depreciation
• recapture
• Section 1245
• Section 1250
• Section 1231
• bonus depreciation
• cost segregation
• tax strategy

Mentioned in this episode

Organizations: Hall CPA

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