You Wrote It Off at 100%. Now You're Selling It — Meet Depreciation Recapture.

For the last couple of years, every equipment and vehicle purchase came with a giant write-off bolted onto it. With 100% bonus depreciation permanent again, you bought the $70,000 truck and deducted the whole $70,000 in year one. Felt great. The deduction was real.

But here’s the part nobody puts in the same sentence: that write-off was never a gift. It was a loan against the day you sell the thing — or stop using it for business. The IRS keeps a tab, and the name on the tab is “recapture.”

What “recapture” actually means

When you depreciate an asset, you drive its tax basis — the number you measure gain against — down toward zero. Write off the full $70,000 truck and your basis in it is now $0. Sell that truck three years later for $40,000 and you don’t have a $40,000 loss to play with. You have a $40,000 gain, because $40,000 minus a zero basis is $40,000.

Now the sting. That gain isn’t taxed at the friendly long-term capital gains rate. Because you already deducted it against ordinary income, the law makes you pay it back the same way — as ordinary income. “Section 1245 recapture,” in quotes, just means: the depreciation you took comes back at your regular rate, up to the amount of your gain. In a 32% bracket, that $40,000 is roughly $12,800 to the IRS in the year you sell.

Run the full arc: you deducted $70,000 and saved about $22,400 up front. Years later you recapture $40,000 and pay back about $12,800. You’re still ahead — but only by the years you held the money and by whatever’s left of the truck’s value you actually consumed. The deduction didn’t erase the tax. It deferred it and changed its timing.

The vehicle trap: you don’t even have to sell it

Heavy vehicles and other “listed property” — assets the IRS watches because they’re easy to use personally — carry a second tripwire. If your business use drops below 50% before the asset’s recovery period ends, you owe recapture that year, with no sale at all.

Say you bought the SUV, used it 80% for business, and took the big Section 179 and bonus write-off. Two years later the work slows down and the truck becomes mostly the family hauler — business use falls to 40%. The IRS makes you go back, recalculate the deduction as if you’d been on the slow, straight-line schedule all along, and report the difference as ordinary income now. You got the accelerated deduction; the moment you stopped qualifying for it, part of it comes back. Annoying, but that’s the rule, and it’s exactly the kind of thing that turns a clean return into a letter.

What to do about it

You don’t avoid recapture. You plan around it. A few moves that matter:

Keep a real mileage and use log on every vehicle you wrote off — the burden is on you to prove business use stayed above 50%, and a reconstructed guess won’t hold. Time big sales into a lower-income year when you can. And before you trade in or sell anything you depreciated hard, get the gain calculated first, because the tax on the sale can quietly eat the cash you were counting on.

The bottom line: a 100% write-off is a timing tool, not a magic eraser. Treat it like one and it’s a genuine advantage. Forget the tab is running and the recapture bill lands when you least expect it.

This article is general information, not tax advice. Depreciation, recapture, and the gain on any sale depend on your specific asset, basis, and business use — let's run your actual numbers before you sell or trade anything you've written off.