Printer Friendly
Dictionary, Encyclopedia and Thesaurus - The Free Dictionary
1,725,251,781 visitors served.
forum mailing list For webmasters
?
New: Language forums
Dictionary/
thesaurus
Medical
dictionary
Legal
dictionary
Financial
dictionary
Acronyms
 
Idioms
Encyclopedia
Wikipedia
encyclopedia
?

depreciation recapture

   Also found in: Wikipedia 0.02 sec.
depreciation recapture

Depreciation Recapture
A procedure the IRS uses to maximize tax revenue from depreciating assets by requiring the profit on the sale of a depreciating asset to be reported as ordinary income rather than capital gain. Because capital gains are taxed at a lower rate than most ordinary income, the IRS uses depreciating recapture to make up for some of the tax revenue lost in the depreciating asset. Depreciation recapture is assessed if the assets are sold for a price higher than their depreciated value.

depreciation recapture

A tax law provision that some depreciation expenses taken on real property must be “recaptured” upon a sale of the asset and taxes paid at ordinary income rates rather than capital gains rates. Ordinarily, property held for more than one year and then sold will qualify for capital gains tax rates,which are lower than ordinary income tax rates.

There are two exceptions in which some or all of the gain must be taxed at ordinary income rates:

1. If depreciation was taken on personal property, that portion of the gain that is equal to total depreciation taken over the years will be taxed at ordinary income rates.

2. If accelerated depreciation was taken on real property (see depreciation methods for an explanation), then that portion of the gain represented by the difference between straightline depreciation and the accelerated depreciation will be taxed at ordinary income rates.



How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content.
?Page tools
Printer friendly
Cite / link
Email
Feedback
Add definition
? Mentioned in ? References in periodicals archive
 
Under the current tax laws, when owners/investors sell a property, they must pay capital gains tax and depreciation recapture taxes on any gain.
1245 property can trigger significant depreciation recapture rules.
1245 property is tangible personal property subject to depreciation recapture at ordinary income tax rates.
 
Financial browser? ? Full browser
 
 
Financial Dictionary
?

Disclaimer | Privacy policy | Feedback | Copyright © 2009 Farlex, Inc.
All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional. Terms of Use.