What Is Depreciation Recapture In Real Estate Taxation
JB
Jeremiah Boucher Founder, Patriot Holdings • Author of Finding Your Edge
Key Takeaways
- Cost segregation accelerates depreciation by reclassifying building components into 5, 7, and 15-year property.
- A cost seg study on a $5M acquisition can generate $1M+ in first-year depreciation deductions.
- Bonus depreciation lets you take 100% of the accelerated depreciation in year one — but check the current phase-down schedule.
- Depreciation recapture is taxed at 25% when you sell — plan your exit with a 1031 exchange to defer both capital gains and recapture.