eoin

"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.