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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Commercial real estate purchased in 2010 for $600,000 Sold

Customer Question

Commercial real estate purchased in 2010 for $600,000 Sold in 2015 for $800,000
Bldg was depreciated SL 39 years $500,000 basis Is the depreciation recaptured as a 1250 gain at 25%
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

ONLY additional depreciation is recaptured for real estate assets.

If only depreciation claimed was SL depreciation - nothing is recaptured.

Expert:  Lev replied 1 year ago.

If you dispose of depreciable or amortizable property at a gain, you may have to treat all or part of the gain (even if otherwise nontaxable) as ordinary income.

Gain on the disposition of section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable on the property.

If you hold section 1250 property longer than 1 year, the additional depreciation is the actual depreciation adjustments that are more than the depreciation figured using the straight line method.

So when SL depreciation was used - there is NO additional depreciation and nothing to recapture for section 1250 assets.

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