How a Landlord Uses Depreciation Recapture to Avoid a Tax Bomb

In this episode of The Real Estate Investing Podcast, Lucas and Luna break down depreciation recapture — the tax surprise that hits landlords when they sell a rental property they've been depreciating. They walk through a concrete example: a landlord who bought a duplex for $400,000, claimed $145,000 in depreciation over 27.5 years, and then sold for $550,000. The result? A $145,000 depreciation recapture tax at a max 25% rate, plus capital gains on the rest. The hosts explain how Section 1250 works, why depreciation recapture is often called a 'tax bomb,' and three strategies to mitigate it: cost segregation studies, 1031 exchanges, and converting a rental to a primary residence before sale. They also discuss the difference between recapture and capital gains, and how the Net Investment Income Tax can add another 3.8% on top. This episode gives listeners a clear framework for planning an exit strategy before they sell. A must-listen for any buy-and-hold investor. #DepreciationRecapture #Section1250 #TaxStrategy #RealEstateInvesting #LandlordTips #1031Exchange #CostSegregation #CapitalGains #RentalProperty #TaxBomb #FexingoBusiness #BusinessPodcast #Finance #RealEstateWealth #CashFlow #Podcast #InvestmentProperty #ExitStrategy Keep every episode free: buymeacoffee.com/fexingo