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September 22, 2024
Question

Passive Losses and Depreciation Recapture

  • September 22, 2024
  • 1 reply
  • 0 views

I am a non-resident of the US (had abandoned green card) and am planning to sell a property I own in the US I have been renting for the last 3 years. 

 

I have ~$75K of passive losses, and around $200K of depreciation to be recaptured.   If I sell the property and assume I make zero gain outside of the depreciation recapture...

 

- I understand I have to pay 25% tax on the depreciation recapture.  Is that regardless of my ultimate taxable income level?  Re-highlighting I do not have any US wages/salaries as am a non-resident for tax purposes. 

 

- Would I be able to use my passive losses to offset some of the recapture ultimately?  I do not have other types of income in the US (no wages, no salaries, no investment income) 

1 reply

September 22, 2024

@v0yage23 wrote:

I understand I have to pay 25% tax on the depreciation recapture.  Is that regardless of my ultimate taxable income level? 


No, it is graduated starting at 0% and capping out at the 25% maximum.