Capital Gains Tax / Recapture Rates

Capital Gains Tax on Commercial Properties

Capital Gain Tax is calculated by: Sale Price – Cost of Asset (Purchase Price + Capital Improvement) = Gain

Generally, 50% of the capital gain is tax free and 50% is subject to marginal tax rate in the year of the sale.

Recapture Rates Tax for Commercial Properties

Owners have the option of depreciating their Real Estate assets to shelter income. However at the time of sale, unless the asset sells for less than the Capital Value on the books, owners will generaly need to “recapture” the sheltered income and pay tax on the recaptured income at the owners marginal tax rate in the year of sale.