Depreciation recapture is the portion of a property's sale gain that may be subject to tax when the owner previously claimed depreciation deductions.
When you sell a property you've been depreciating, the IRS may tax some of the depreciation previously claimed at a rate of up to 25%, depending on the type of depreciation and applicable tax rules. This can affect the after-tax proceeds from a sale, whether you own an entire property or a fractional interest. Understanding depreciation recapture is an important part of evaluating the potential financial outcomes of a real estate investment.
GoForth encourages all owners to consult qualified tax professionals who understand fractional real estate and its tax implications. Because GoForth's ownership structure involves LLC membership interests, the allocation and treatment of depreciation and any eventual recapture depend on the applicable tax structure and individual circumstances.
Understanding depreciation recapture upfront can help owners make informed decisions about their investment and potential resale through GoForth's Exit Guarantee.
This information is provided for educational purposes only and is not intended as tax, legal, or financial advice. Consult a qualified tax advisor regarding your individual circumstances.