If an investor sells a single family residence which has been used as an rental property acquired after 1987 and it has $50,000 of accumulated depreciation taken and invests his proceeds into mineral interests is the $50,000 immediately recaptured?

Hi Steve,

Did you complete a 1031 exchange out of the SFR and into the mineral rights or did you sell the SFR and acqurie the mineral rights without completing a 1031 exchange?

Bill,

I did a 1031 exchange.

Thanks,

Steve 

Hi Steve,

The depreciation recapture would be recognized in the year you sold your relinquished property because you acquired an asset that was not depreciatable.  Mineral rights are depleting assets, not depreciable assets.