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Real property is considered placed in service in the middle of the month in which acquired ("mid-month convention"). Special rules apply for pro rating deductions for short tax years and for the first year of business, or where more than 40% of tangible personal property additions are in the final quarter of the year. [5]
Under rules contained in the current Internal Revenue Code, real property is not subject to depreciation recapture. However, under IRC § 1(h)(1)(D), real property that has experienced a gain after providing a taxpayer with a depreciation deduction is subject to a 25% tax rate—10% higher than the usual rate for a capital gain.
Buildings were not eligible for section 179 deductions prior to the passage of the Small Business Jobs Act of 2010; however, qualified real property may be deducted now. [2] Depreciable property that is not eligible for a section 179 deduction is still deductible over a number of years through MACRS depreciation according to sections 167 and 168.
The mid-month convention applies only to real property. Under the mid-month convention, one-half month of depreciation is allowed for the month the asset is placed in service or disposed of and a full month of depreciation is allowed for each additional month of the year that the asset is in service.
Separately, the tax on collectibles and certain small business stock is capped at 28%. The tax on unrecaptured Section 1250 gain — the portion of gains on depreciable real estate (structures used for business purposes) that has been or could have been claimed as depreciation — is capped at 25%.
Per the Zillow Home Value Index, U.S. home value is $358,734, up 4.3% between May 2023 and May 2024. The real estate marketplace also published a forecast that predicts home prices will rise 0.6% ...
Walkup predicts that real estate prices will dip in 2024 — but this dip will likely be short-lived. “Right now, the market is treading water,” he said. “The buy-side and sell-side are both ...
Meanwhile, two other West Palm Beach office buildings are expected to be finished within months. One Flagler by Related Cos. of New York, reported to be 75% pre-leased, will open in 2024.