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Depreciation Recapture | Definition, Types, Triggering Events

Depreciation recapture occurs when the IRS reclaims tax benefits obtained through depreciation upon the sale of a depreciable asset. This recaptured amount is usually taxed as ordinary income, significantly impacting investors' tax liabilities. Strategies to minimize these taxes include like-kind exchanges, investing in Qualified Opportunity Zones, and strategic timing of asset sales. Understanding the different rates and rules for various asset types is essential for effective tax planning.

Check out this article from Nasdaq: https://www.nasdaq.com/articles/depreciation-recapture-definition-types-triggering-events

Depreciation recapture