The recovery of funds invested, i.e., the return of an investment as opposed to a return on an investment. Applies to capitalization rates and also tax considerations and capital cost allowance.
The inclusion of a previously deducted or excluded amount in gross income or tax liability. Recapture may be applicable to accelerated depreciation, cost recovery, amortization, and various credits.
The rate of interest necessary to provide for the return of an investment. A provision in tax laws that reduces certain benefits from claiming depreciation. Back to the Top
Amount of depreciation or section 179 deduction that must be reported as ordinary income when property is sold at a gain.
The reclamation by the IRS, of tax deductions or credits previously taken by a taxpayer. In particular depletion, accelerated depreciation; tax credits are subject to recapture.
The undoing of a tax benefit if certain requirements are not met in future years. For example: (1) The low-income housing credit may be recaptured or added back to tax if the credit property ceases to be used as low-income housing for a minimum number of years. (2) The alimony deduction may be retroactively lost or recaptured if payments do not continue at the requisite level for a minimum number of years.
To include as income on your return an amount allowed or allowable as a deduction in a prior year.
Recapture refers to the taxable gain produced when an asset is sold for an amount which exceeds its depreciated basis. The prospect of triggering recapture is often a deterrent to selling partnership assets due to the negative tax consequences which result.
1. A condition set by the seller of an asset that gives him/her the right to purchase back some or all of the assets within a certain period of time. 2. A situation where an individual must add back a deduction from a previous year to their income.
Contract clause, which may allow the prior owner to recover the property under certain circumstances. Alternately, return of an owner's investment through, among other things depreciation allowance.