Depreciation Recapture Tax
We purchased a condo in 2011 and have rented it out since then. Each year, the rent we collected didn’t fully cover the monthly cost. We did get some tax deductions for our out of pocket cost over the years. We now have to sell the condo (too costly to keep) and we told we would have to pay depreciation recapture tax. We don’t understand how that works. (This property was never our primary residence)
Terry Says
You need to speak with the person who prepared your tax returns over the years you owned the property. It appears he/she took “depreciation” deductions to offset your income from the property. On the sale, the depreciation must be “recaptured”!
You need a tax pro to review your costs, any upgrades or special assessments you paid, etc — as well
As how the income was handled over the years — to figure out any taxes owed when you sell.
