That depreciation you took for years? The IRS collects it back when you sell, at ordinary rates (§1245) or up to 25% (§1250). Here's the trap, and why it has to be planned before you list.
A plain-English guide for sellers: how a structured installment sale defers the tax when you sell a business, practice, or property — the math, the alternatives, and how to know if your deal fits.
Drop your info — instant PDF download + within 1 business day Hans will email a preliminary read on which structure fits your deal. No retainer. Carrier compensates the broker — not you.
📞 Hans Goldstein · 213-340-2018 · CA Insurance License #4322192 · Independent §453 specialist · Goldstein & Co. LLC
You sell a rental property or business equipment, expect a tidy capital gain, and your accountant hands you a bill with a big chunk taxed as ordinary income. That's depreciation recapture, the most common tax surprise for sellers of business and investment property. Here's how it works, and why it matters before you sell.
Send me the sale price and rough basis and I'll email you the actual number within one business day — plus the Seller's Guide to §453. If it doesn't fit your deal, I'll tell you that plainly.
No retainer · no obligation · the carrier compensates the broker, not you.
Every year you depreciated that property, you took a deduction against ordinary income. Recapture is the IRS collecting that benefit back when you sell, taxing the depreciated portion of your gain at ordinary (or special) rates instead of the lower capital-gain rate.
A landlord who depreciated a building for 20 years can face a sizable slice of the gain taxed at 25% (unrecaptured §1250), plus regular capital-gain rates on appreciation, plus the 3.8% NIIT, plus California's ordinary rate. The "simple" sale has four different rates inside it.
An installment sale can spread the capital-gain portion across years, but recapture is generally recognized up front, in the year of sale. Knowing this before you sell lets you plan: time the sale, size the down payment, and structure the deferrable portion so you're not hit with recapture and a top-bracket gain in the same year.
Depreciation isn't free money, it's a deferral you eventually settle up on. The sellers who keep the most understand recapture before they list, and structure the sale around it instead of discovering it on the tax return.
Before you sign anything, run your numbers with someone who structures the deal to be tax-smart and audit-ready from day one.
Call 213-340-2018 Run the Numbers →
Hans Goldstein · Goldstein & Co.
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