377. You Can't Escape Depreciation Recapture (But Here's How 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 provide, and should not be relied on for, tax, legal, or accounting advice. Information on the podcast may not constitute the most up-to-date legal or other information. No reader, user, or listener of this podcast should act or refrain from acting on the basis of information on this podcast without first seeking legal and tax advice from counsel in the relevant jurisdiction. Only your individual attorney and tax advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this podcast or any of the links or resources contained or mentioned within the podcast show and show notes do not create a relationship between the reader, user, or listener and podcast hosts, contributors, or guests. Any mention of third-party vendors, products, or services does not constitute an endorsement or recommendation. You should conduct your own due diligence before engaging with any vendor.