Depreciation Recapture

When personal property is sold at a gain, the gain is Ordinary Income to the extent of Depreciation previously deducted; when real property is sold at a gain and Accelerated Depreciation has been claimed, the taxpayer may be required to pay a tax at ordinary rates to the extent of the accelerated part of depreciation or in some cases for all of the depreciation taken.

An annual tax deduction for wear and tear and loss of utility of property. See accelerated depreciation, modified accelerated cost recovery system, declining balance depreciation, depreciable real estate (tax), depreciable basis, depreciable life, depreciation methods, depreciation recapture.
Example: Tax depreciation allows a tax deduction without a cash payment, thus providing an important benefit to real estate investors. A tax depreciation deduction may be claimed even when the property's market value increases. The annual tax depreciation deduction allowed for improvements (land is not depreciable) is 3.64% for rental housing (271⁄2-year life) and 2.56% for commercial and industrial property (39-year life).

Portion of a capital gain (the amount of a gain on depreciable assets) representing tax benefits previously taken and taxed as ordinary income.