Are you prepared for the tax impact when selling your rental property? Depreciation recapture can significantly affect your returns, but what exactly is it, and how can you minimize or manage it? In this episode, Rich Lennon breaks down depreciation recapture, tax implications, and strategic options like 1031 exchanges and opportunity zones.
You’ll Learn How To:
- Understand what depreciation recapture means and why it matters
- Explore strategies to defer or minimize depreciation recapture taxes
- Evaluate the pros and cons of 1031 exchanges and opportunity zones
- Discover why sometimes paying the tax can be the most brilliant move
Who This Episode Is For:
- Real estate investors planning to sell rental properties
- Landlords wanting to understand the tax implications of depreciation
- Investors are curious about tax deferral strategies like 1031 exchanges
- Anyone interested in maximizing wealth through innovative property portfolio management
Why You Should Listen
Rich Lennon breaks down complex tax topics into straightforward advice designed to help you keep more equity and control. If you want to make informed decisions about selling and reinvesting your rental properties, this episode offers clear insights and proven strategies.
What You’ll Learn in This Episode
- (00:28 – 01:51) Depreciation recapture triggers taxes when selling rental homes.
- (01:57 – 02:59) Real estate professional status lets passive income offset active income.
- (03:22– 04:02) Depreciation recapture tax is capped at nearly 25 percent
- (04:13 – 04:39) 1031 exchange allows deferral of depreciation and capital gains
- (04:47 – 05:41) Opportunity zones offer tax breaks if investment is held for 10 years
- ([05:47 – 06:59) Paying depreciation recapture grants better control of your money
- (07:45 – 08:37) Example of recapture tax on $150,000 property after nine years
- (09:42 – 10:10) Avoiding recapture limits investment choices and financial flexibility
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