Why is there home office depreciation recapture at all?

[prkwork]

In depreciating a home office, that office is supposed to be depreciated as commercial real property, which is MACRS straight-line over 39 years. Generally, §1250 property is depreciable real property (i.e., buildings and improvements) that is not subject to §1245. Now, a home office is "buildings and improvements". So, this home office nonresidential real property (in the MACRS 39-year class) is depreciable only under straight-line, this real property is not subject to recapture.

Yet, it has been my understanding that there is home office depreciation recapture, and many posts talk about matters surrounding this. But no one that I have seen explains why such depreciation recapture even exists, given the paragraph above. Please explain.

[sjrcpa · Accepted solution]

When you sell your home that has had prior depreciation, gain is taxable to the extent of depreciation claimed, assuming the rest of the gain is excludable under Section 121. This taxable gain is Unrecaptured 1250 Gain. EDIT: This gain is taxed at a maximum rate of 25% instead of being ordinary income.

This is different than the old 1250 depreciation recapture which was the excess of deprecation claimed over straight-line depreciation.

[prkwork]

Just to clarify: The gain is taxable to the extent of depreciation claimed or depreciation that could have been claimed. If this also is no more, tell me and cite where. Thanks.

[sjrcpa]

Depreciation allowed or allowable is still the rule.

[GingerU]

that is incorrect, unless I am reading  Pub 587, pg 15 (2022) incorrectly.  It says that "If you can show by adequate records or other evidence that the depreciation you actually deducted (the allowed depreciation) was less than the amount you were entitled to deduct (the allowable depreciation), the amount you cannot exclude (and must subtract from your total gain when figuring your exclusion) is the amount you actually deducted."

[sjrcpa]

IRS Publications are not authoritative.