Rental Property Sale? Think Beyond Today's Tax Savings! - Palma Financial

Thinking of selling your office building, store, or warehouse? Did you make interior improvements? This newsletter explains how those improvements might impact your future taxes.

Key points:

  • Today’s deduction can become tomorrow’s higher tax bill: Certain improvements trigger “ordinary income recapture” when you sell, meaning it’s taxed at higher rates than regular capital gains.

Three ways to depreciate improvements (QIP):

  • Straight-line: Slower deduction, lower future tax hit.
  • Section 179: Big deduction upfront, high future tax.
  • Bonus depreciation: Same as Section 179, but may be temporarily increased to 100%.
  • Plan! Understand the trade-offs and choose the right method based on your plans.

Let’s make your property work harder for you!

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