ningning1984

In OP question depreciation is higher or equal to capital gains.

freecmorgan Wrote:
-------------------------------------------------------
> "You pay depreciation recapture taxes for the
> amount of your capital gains above the
> book value."
>
> Yes, but only up to the extent of cumulative
> depreciation.
>
> Quick example:
>
> $100 original cost
>
> $20 Depreciation
>
> $80 Book Value
>
> Sell for $110
>
> Gain is split: $20 Recapture (higher rate), $10
> (Capital Gain)
>
> Reasoning (if you care) :-).
>
> Depreciation offsets ordinary income, so if you
> recover it, the government feels the need to tax
> you at ordinary income rates for that piece of the
> gain. Any amount above that is deemed investment
> (capital) gain.



Edited 2 time(s). Last edit at Friday, June 3, 2011 at 08:11PM by jpsi1.