EP 107 - Depreciation Recapture - How the IRS Takes Back Your Deduction

The Mark Perlberg CPA Podcast

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Depreciation recapture can create substantial tax liabilities when selling business assets or real estate, even when selling at or below your original purchase price. We explain how this overlooked tax works and provide strategies to completely eliminate or reduce the tax impact.
• Different types of property face different recapture tax rates – building structures (Section 1250) capped at 25%, personal property (Section 1245) at your ordinary income rate
• Cost segregation studies create larger future recapture tax liabilities that can surprise unprepared sellers
• Installment sales require immediate payment of all recapture taxes even when cash is received over time
• 1031 exchanges can defer recapture taxes when properly structured with equivalent replacement assets
• Creating losses from other properties through cost segregation studies can offset recapture taxes
• Suspended passive losses from prior years can be used to offset recapture income
• Strategic timing of other business expenses can help minimize the tax burden
• Inherited property receives a stepped-up basis, eliminating depreciation recapture concerns
If you want help mitigating taxes from depreciation recapture events and creating lifelong tax savings, visit ProsperalCPA.com/apply
Ready to slash your tax bill? Schedule your free consultation and let's strategize your tax savings together! Book now at: https://www.prosperlcpa.com/apply Or, if you still need more time, here are some other ways to begin winning the tax game...

Take our free Tax Planning Checklist & learn about what tax savings may be available for you in our minicourse at https://taxplanningchecklist.com

At the very least, get on our newsletter to gain access to free live events and exclusive insight you won't find anywhere else: https://www.prosperlcpa.com/subscribe

Chapters

1. What Is Depreciation Recapture? (00:00:00)

2. How Recapture Is Taxed (00:02:17)

3. Tax Traps in Property Sales (00:06:00)

4. Strategies to Eliminate Recapture Tax (00:11:51)

5. Creating Losses to Offset Gains (00:18:34)

6. Key Considerations and Recommendations (00:20:21)