Does this avoid recapture?
Yes, for the item that's gone, and only for that item. Recapture only taxes a gain (26 CFR 1.1245-1(d)). An item thrown away or scrapped for $0 can't produce a gain, so the depreciation already taken on it is never taxed back. Recapture on everything you still have is unchanged.
Why writing it off matters: if a retired item stays on the schedule, its depreciation stays in the property's running total and can be taxed at sale. For a building part, the leftover value also keeps being depreciated alongside its replacement — two roofs on the books at once.
Two real-world examples
Example 1 — a replaced roof (building part)
| Line | Amount |
|---|---|
| Old roof's share of building cost (from the cost segregation study) | $20,000 |
| Placed in service | Jan 2020 |
| Removed and thrown away | Jun 2026 |
| Depreciation taken, Jan 2020 – Jun 2026 (27.5-yr, mid-month) | $4,666 |
| Value left on the books = loss on Form 4797 | $15,334 |
| Tax effect at a 32% bracket, if the loss is usable this year | about $4,907 |
| Depreciation that will never be taxed back | $4,666 |
The new roof is a separate asset and starts its own 27.5-year clock.
Example 2 — a thrown-out sofa (100% bonus in year 1)
| Line | Amount |
|---|---|
| Cost | $3,000 |
| 100% bonus depreciation in year 1 | $3,000 |
| Value left on the books | $0 |
| Thrown out for $0 in year 3 → loss this year | $0 |
| Recapture on the $3,000 already written off | $0 (sold for $0, so no gain) |
You don't get a second deduction, and you don't pay back the first one. Taking the sofa off the schedule cleans up your books.
The IRS rules behind this
| Topic | What the rule says | Primary citation |
|---|---|---|
| What counts as getting rid of an asset | Retirement, abandonment, sale, exchange, or destruction of a depreciable asset or component. | 26 CFR 1.168(i)-8(b)(2) |
| Writing off a building part (partial disposition) | Lets you deduct the remaining basis of a replaced roof, HVAC, windows, or building component on that year's timely filed return. | 26 CFR 1.168(i)-8(d)(2) |
| Gain or loss on disposition | Amount realized minus adjusted basis; abandonment for $0 produces an ordinary loss equal to remaining basis. | 26 CFR 1.168(i)-8(e); IRC § 1231; Form 4797 |
| Estimating the cost of the old part | Permits PPI rollback of replacement cost, pro-rata area/length/cost share, or a cost segregation study. | 26 CFR 1.168(i)-8(f)(3) |
| Recapture on 5-, 7-, and 15-year property | Ordinary income recapture applies only to a gain, up to depreciation taken. Zero proceeds means zero recapture. | IRC § 1245(a); 26 CFR 1.1245-1(d) |
| Unrecaptured § 1250 gain on 27.5-yr property | Gain up to straight-line depreciation is taxed at up to 25%. Losses have no recapture. | IRC § 1(h)(1)(E); IRC § 1250 |
| Depreciation in the year the item leaves | Half-year convention gets 50% of the full year; mid-month gets (month − 0.5)/12; mid-quarter gets (quarter − 0.5)/4; zero if placed and retired in the same tax year. | IRC § 168(d); IRS Pub. 946, Ch. 4 |
| Removal & demolition cost | If you make a partial disposition election, removal cost is not capitalized into the new replacement asset. | 26 CFR 1.263(a)-3(g)(2) |
| The replacement item | Capitalized as a new asset unless covered by a repair safe harbor. | 26 CFR 1.263(a)-3(k) |
| Safe harbors for smaller items | De minimis safe harbor ($2,500 per item), routine maintenance safe harbor, and small-taxpayer safe harbor (lesser of $10,000 or 2% of unadjusted building basis). | 26 CFR 1.263(a)-1(f); 26 CFR 1.263(a)-3(h), (i) |
| Passive / non-passive character | Follows the rental activity's status for the year of disposition and is subject to the § 461(l) Excess Business Loss limit when non-passive. | 26 CFR 1.469-2T(c)(2); IRC § 461(l) |
Frequently asked questions
Does writing off a retired item avoid depreciation recapture?
Yes, for the item that is gone, and only for that item. Recapture only taxes a gain (26 CFR 1.1245-1(d)). An item thrown away or scrapped for $0 cannot produce a gain, so the depreciation already taken on it is never taxed back. Recapture on everything you still own is unchanged.
What is the partial disposition election for a replaced roof, HVAC, or windows?
When you replace a part of the building itself (such as a roof, HVAC system, or windows), writing off the remaining basis of the old component requires a partial disposition election under 26 CFR 1.168(i)-8(d)(2) on your timely filed return for the year the replacement happens. If that return was already filed without the election, claiming it usually requires Form 3115.
What if my appliance or sofa was already 100% written off with bonus depreciation?
If a 5-year item was 100% written off in Year 1 using bonus depreciation and is later thrown out for $0, its remaining book value is $0. You get no new deduction when you toss it, and the Year-1 write-off is never recaptured because you sold it for $0. Removing it cleans up your depreciation schedule.
How do you estimate the cost of an old roof if I do not have a cost segregation study?
When the exact original cost of a replaced building component is not separately stated, the IRS permits any reasonable method applied consistently (26 CFR 1.168(i)-8(f)(3)), including discounting your current replacement invoice back to the placed-in-service date using the Bureau of Labor Statistics Producer Price Index (PPI) and adjusting for age and condition.
This content is not tax or financial advice for you. Please talk with a CPA to find what's right for your situation.