Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Bob78164:

<<<<RooCat writes (in part):

IMO, depreciation on your house, if you ever plan to sell, is not worth the trouble, especially since the percentage is fairly small as a rule (square footage used divided by total square footage times 3.4+ to 3.6+% [depending on the year of service]), besides having to recapture as ordinary income.>>>>

Bob writes: "I reply:

I might be wrong, but I believe that recaptured depreciation is not taxed as ordinary income, but is subject to a special tax rate of 25%. So for a taxpayer in the 28% bracket or higher, depreciation followed by recapture still leaves you ahead of the game. --Bob"


Yes, but it is a home that we are talking about --- under certain circumstances gain up to 250k or 500k would not be taxable at all, so 25% recapture of any depreciation is > 0.

Even if gain is not excludible, if home is held for more than 1 year, LTGC rate would apply, and 25% recapture is > 20% LTCG rate.

Only if house is sold and gain is taxed as STCG is 25% recapture better than ordinary income tax rates for certain higher bracket taxpayers.

WRT AMT all bets are off because my knowledge is minimal at best.

Just my $0.02. Regards, JAFO
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement