Depreciation Recapture taxes
I am about to sell a rental 3-unit property that has had a good bit of depreciation of my purchase price + the depreciation of the improvements I added, new appliances etc.
When I sell the property I am I responsible for paying the depreciation recapture on just the depreciated value of the original purchase price or also the annual depreciation on the improvements I made on the purchase. And if it is both is there anyway to avoid the latter?
The buyer isn't doing any type of cost segregation.
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@Gonzalo Escobaryou will pay taxes on the gain you have offset by the depreciation for both the real estate and the improvements. Whether or not the buyer does any cost segregation has no effect on your tax liability. Before selling you should consult a CPA and possibly consider a 1031 exchange.