Depreciation Recapture
Depreciation recapture is the IRS mechanism that taxes previously claimed depreciation deductions when a commercial property is sold, typically at a 25% rate under Section 1250, converting paper losses back into taxable income at closing.
Understanding Depreciation Recapture
Depreciation recapture is the IRS mechanism that taxes previously claimed depreciation deductions when a commercial property is sold, typically at a 25% rate under Section 1250, converting paper losses back into taxable income at closing.
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Frequently Asked Questions
What is Depreciation Recapture in commercial real estate?
Depreciation recapture is the IRS mechanism that taxes previously claimed depreciation deductions when a commercial property is sold, typically at a 25% rate under Section 1250, converting paper losses back into taxable income at closing.
Why is Depreciation Recapture important for NNN investors?
Depreciation Recapture is a key concept that affects property valuation, financing decisions, and investment returns in the triple net lease market. Understanding Depreciation Recapture helps investors make informed acquisition and management decisions.
How does Depreciation Recapture affect property value?
Depreciation Recapture directly influences how commercial properties are valued, financed, and traded. Changes in Depreciation Recapture can impact cap rates, NOI calculations, and overall investment performance for net lease properties.
Where can I learn more about Depreciation Recapture?
NNN Triple Net's Learning Center offers practical guides covering Depreciation Recapture and related CRE concepts. Visit the glossary for related terms and explore our calculators for practical application.