1245 and 1250, to convert all or part of the capital gain to ordinary income through depreciation recapture
One major downside to the current law is the unequal treatment of depreciation recapture
on real estate investments.
1) Although the Federal long-term capital gain rate is currently only 15%, straight-line depreciation recapture
on real estate is 25%.
Other topics include multiple property, reverse, build-to-suit exchanges and related-party exchanges, and various tax incidents, such as boot, basis and depreciation recapture
168(i)-4(c), business or income-producing property converted to personal use is treated as a disposition; however, the taxpayer recognizes no gain, loss or depreciation recapture
on the conversion.
2003-107, serves as a reminder that not all real estate depreciation recapture
by individual taxpayers is taxable at the 25% rate enacted by the Taxpayer Relief Act of 1997 (TRA '97).
The 2015 Special Distribution is in an amount that includes the sum of: estimated foreign earnings and profits repatriated as dividend income to be recognized in 2015; taxable income in 2015 from depreciation recapture
in respect of accounting method changes commenced in Equinix's pre-REIT period; and certain other items of taxable income.
The 2015 Special Distribution is in an amount that includes the sum of: (1) estimated foreign earnings and profits repatriated as dividend income to be recognized in 2015; (2) taxable income in 2015 from depreciation recapture
in respect of accounting method changes commenced in Equinix's pre-REIT period; and (3) certain other items of taxable income.
In addition, termination of a GAA may subject the taxpayer to depreciation recapture
provisions under the Code.
Important to real estate are proposals to increase the depreciable lives of real property used in business or held for investment; raising the tax rate on gain from depreciation recapture
and repealing the tax rules that allow taxpayers to exchange like-kind real estate on a tax-deferred basis.
IREM and CCIM Members representing 30 states and the District of Columbia will hold 180 meetings with their respective senators, representatives and their staffs to raise awareness of the industry's legislative positions on federally assisted housing, terrorism risk insurance and tax issues, including depreciation increases, depreciation recapture
and like-kind exchange.
The original owner would have greater gain and depreciation recapture
upon the sale of rental property held for a number of years.