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.

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