real estate

Recapture

All depreciation or cost recovery taken on depreciable property during the year of sale that is in excess of the amount allowed by the straight-line method is subject to recapture provisions as established by the Internal Revenue Service. This has the effect of taxing the excess at ordinary income rates. The purpose of recapture is to stop a taxpayer from benefiting from accelerated depreciation and capital gain treatment at the same time by taking advantage of both of these tax breaks.