Does real estate depreciation ever become non taxable.

wrote

Don't know who you heard that from. The records on cost basis (purchase + improvements) and depreciation should be kept for as long as you have that property and then boxed up and stored with the records for the year of the return in which you sold or otherwise disposed of the property.

I think a long time ago there was a distinction with respect to pre 1964 (or some such year) depreciation, but that is reaching way back into my memory . .. .

In article , Gil Faver > improvements) and depreciation should be kept for as long as you have that

For Sec 121 exclusion purposes, depreciation allowed or allowable since May 6 1997 is not excludable. No age limitations.

Both are correct in the sense that you must claim "depreciation allowed or allowable"--it really doesn't help if your records show you hadn't depreciated everything you were supposed to.

I believe if your estate sold the property it would not have to recapture the depreciation, although that is a rather extreme method of tax avoidance.

Not higher than your ordinary tax rate.

-Mark Bole

But Long Term section 1250 maximum rate is 25% which is higher than 15%.

Right, my point was 25% is the *maximum*, not the minimum.

No, it is not a matter of accelerated depreciation. As a simple example, suppose you owned a residential rental building purchased for $50K, you've taken $20K straight line depreciation, and you sell it for $80K. You have $30K of long term capital gain, and $20K of unrecaptured

I may well be leaving out historical difference in how depreciation was calculated, in any case Form 4797 is not for the faint of heart.

-Mark Bole

What Mike is referring to is sec 1250 [Sec 1250 covers structural buildings and additions that are structural in nature (a new deck, and not a new refrigerator)] accelerated depreciation taken before 1976. The difference between the accelerated amount and the straight line amount is unrecaptured S 1250 depreciation figured on Part III of the 4797. By now I would expect there are no such properties in existence, but in case there are, the rule is still on the books.

You are talking of the recapture of S 1250 depreciation on sale of such property, and can see the calculation worksheet in the Schedule D S1250 worksheet. Yes, there is such a worksheet.

Actually to clarify my situation is that the only 'improvement' that was depreciated was a $1000 lousy retaining wall. (IMHO it should have been expensed since it was a repair of a 'situation' - but goes along to get along). The property was purchase in 1976 or so in Calif for about 50k - now the land value only - is about one million.

Question - assuming no complications - and nothing fancy what will be the tax rate on that if sold today? Ordinary income or the long term rate or something else? m