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Depreciation recapture

How much of a rental sale is recapture versus long-term capital gain?

Your numbers

Estimated federal tax on the sale

$40,050

Adjusted basis at sale$310,000
Total gain$207,000
Depreciation recapture amount$90,000
Recapture tax$22,500
Remaining gain at long-term rate$117,000
Long-term capital gains tax$17,550

Tip. Educational estimate with the assumptions listed on this page. Not tax, legal, or investment advice.

Assumptions

  • Residential rental recapture is modeled at the rate you enter, default 25% unrecaptured 1250.
  • State tax, NIIT, and 1245 personal-property recapture at ordinary rates are not auto-split.
  • Installment sales and 1031 exchanges are excluded.

Explore the numbers

Examples

Load a scenario, then change one input at a time.

Example 1

Held 7 years

$90k of depreciation on a $550k sale.

Estimated federal tax on the sale

$40,050

Example 2

Heavy cost seg

More recapture after acceleration.

Estimated federal tax on the sale

$62,550

Example 3

High bracket leftover gain

Leftover gain at 20%.

Estimated federal tax on the sale

$92,900

What this calculates

Split a rental sale into depreciation recapture and leftover long-term gain using basis, accumulated depreciation, and your rates.

How to use it

  1. Pull accumulated depreciation from prior returns or depreciation schedules.
  2. Use 25% unless your CPA tells you a different mix of 1245 and 1250.
  3. Compare this result to a 1031 if you are not done owning rentals.

Common mistakes

  • Reporting the whole gain at 15%.
  • Forgetting selling costs.
  • Ignoring NIIT on high MAGI years.

Formula

Gain = amount realized − (original basis − accumulated depreciation). Recapture = min(gain, accumulated depreciation).

FAQ

Is recapture ordinary income?

Unrecaptured 1250 on real property is generally capped at 25%. Personal property (1245) can be ordinary. This tool uses the rate you enter for the recapture slice.

Does a 1031 avoid recapture now?

A valid exchange can defer it. Recapture can still matter later.

Where is NIIT?

Not included. Add 3.8% mentally if MAGI is over the NIIT threshold.

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