Depreciation Recapture on Rental Property: The Trap Nobody Warns You About
Cost segregation gets sold as a near free money tax move. What gets glossed over is what happens when you actually sell the property, because the IRS recaptures the depreciation you took and taxes it at rates that can eat most of the strategy's upside. This post walks through what recapture actually is, why Section 1245 is worse than Section 1250, why cost seg makes recapture harder not easier, and how to manage the problem before it bites you at closing. For the wider playbook, start with [the