When an individual sells a building, what depreciation is being recaptured? Is it the amount of depreciation taken in the prior years or the depreciation left?
Generally, the amount of depreciation you must recapture for residential rental or nonresidential real property is the excess of the depreciation allowed or allowable over straight line depreciation for the property. Thus, if you sell a building placed in service after 1986 which required the use of the straight-line method, you would not have any depreciation to recapture. However, if you took the 30% special depreciation allowance for your building, this allowance may be subject to recapture. For property placed in service in 1986 and earlier, see Publication 946, How to Depreciate Property. For further information, refer to Publication 544, Sales or Other Disposition of Assets, and Supplement to Publication 946, How to Depreciate Property.
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