Q: Sale of completely depreciated rental property
Tax consequences on sale of completely depreciated rental property
Lawyers, want to be a Justia Connect Pro too? Learn more ›
- (916) 704-3009
- View Profile
- Answered
A:
When you sell a completely depreciated rental property, there are several tax consequences to consider. Since the property has been fully depreciated, you must recapture all the depreciation taken during the ownership period as "depreciation recapture." This recaptured amount is taxed at a maximum rate of 25%.
Additionally, if you sell the property for more than your original purchase price, the difference between the sale price and the adjusted basis (which is typically zero if fully depreciated) is considered a capital gain. This gain is taxed at either the short-term or long-term capital gains rate, depending on how long you held the property.
You should also consider any state-specific taxes, as Virginia may have its own rules regarding capital gains and depreciation recapture. Keeping detailed records of the property's depreciation, improvements, and any related expenses will be crucial to accurately calculating your tax liability. It’s wise to review your situation carefully to ensure you understand all potential tax obligations.
1 user found this answer helpful
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
