All taxable income from investment property sales must eventually be classified as either ordinary income,depreciation recapture income,or capital gain income.What is the
Maximum tax rate that an investor can be charged on depreciation recapture income?

Question

Quizplus · Accepted Answer

Depreciation recapture income is taxed at a maximum rate of 25%. This is because when an investor sells an investment property, they must pay taxes on any depreciation that was taken on the property over the years. The IRS views this depreciation as a form of tax deduction, and therefore requires that it be "recaptured" or paid back when the property is sold. The maximum tax rate on depreciation recapture income is 25%, which is higher than the maximum tax rate for long-term capital gains.

All Taxable Income from Investment Property Sales Must Eventually Be