If you claimed depreciation deductions on an investment property, the IRS "recaptures" that depreciation at sale, taxing it at up to 25% under IRC §1250 - regardless of your regular capital gains rate. This is in addition to your capital gains tax. For example, if you took $200,000 in depreciation over your ownership period, you owe up to $50,000 in recapture tax at closing. Factor this into your net proceeds calculation.
From the seller playbook: Depreciation Recapture Planning
This is general information, not legal, tax or accounting advice. Every situation is different. Talk to a licensed attorney, accountant or tax professional before you act.
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