Calculators › Depreciation Recapture Estimator
TaxesWhen you sell a rental you have depreciated, the tax bill is usually bigger than the capital-gains rate alone, because the depreciation you took comes back at up to 25%. This tool splits your gain into the layers the IRS actually taxes so the number at the closing table is not a surprise. It updates as you type.
Your sale
Purchase price plus buying costs and capital improvements.
The IRS counts depreciation you were allowed to take, even if you did not claim it.
Fills the field above using (basis − land) ÷ 27.5 × years.
Commissions and closing costs.
5, 7, and 15-year components from a cost-seg study. These recapture as ordinary income with no 25% cap.
You are selling at or below your adjusted basis, so there is generally no gain and no recapture.
| Adjusted basis | – |
|---|---|
| Total gain | – |
| §1245 recapture (ordinary income) | – |
| §1250 recapture (25% cap) | – |
| Capital gain on the rest | – |
| Effective rate on the gain | – |
A 1031 exchange can defer this entire bill, and heirs may receive a stepped-up basis.
Simplified federal estimate. It ignores state tax and some Net Investment Income Tax nuances, and assumes straight-line residential depreciation for the §1250 portion. Educational only, not tax advice. See IRS Topic 409 and Publication 544, and confirm with a CPA. Last reviewed August 11, 2026.
Depreciation lowers your taxable income each year, but it also lowers your cost basis, which raises your gain when you sell. The IRS then carves that gain into pieces. The part equal to the depreciation you took (or were allowed to take) is "unrecaptured Section 1250 gain," taxed at a maximum of 25%. Anything above that is ordinary long-term capital gain at 0, 15, or 20%. Most sellers price the whole sale at 15 or 20% and get surprised by the 25% layer.
Say you bought a rental for $300,000 with $50,000 of that as land, took about $90,910 of straight-line depreciation over ten years, and sell for $500,000 with $30,000 in selling costs. Your adjusted basis is roughly $209,090, so the total gain is about $260,910. The first ~$90,910 (your depreciation) is taxed at up to 25%, and the remaining ~$170,000 is taxed at your capital-gains rate. Budgeting only for capital gains would understate the bill by thousands.
A properly structured 1031 exchange defers both the recapture and the capital gain into a replacement property. Suspended passive losses can offset recaptured gain. And because heirs generally receive a stepped-up basis, some investors hold until death. Each path has strict rules, so model your specific numbers with a professional. The OBBBA tax changes explain why faster depreciation raises the recapture you are estimating here.
Usually yes. The IRS uses an "allowed or allowable" rule and reduces your basis by the depreciation you were entitled to take, whether or not you claimed it. Form 3115 can recover missed depreciation rather than leaving it on the table.
The depreciation portion of your gain is taxed at up to 25%, separately from and on top of the 0/15/20% rate that applies to the rest of the gain. It is a higher rate on a specific slice, which is why the total bill runs higher than a straight capital-gains estimate.
It defers it, not erases it. The recapture and gain roll into the replacement property and come due when you eventually sell without exchanging again.
The 5, 7, and 15-year components a cost-seg study reclassifies are Section 1245 property. Their depreciation recaptures as ordinary income with no 25% cap, which the advanced section of the tool accounts for.
Ready Utilities was founded by Cedrick Reese, a retired veteran and web developer who enjoys building free, user-friendly online tools that simplify everyday tasks. My journey began in the early 2000s with affiliate marketing and niche site development, which grew into a passion for creating practical digital utilities and calculators. After retiring, I earned a Computer Systems Technician certificate from UEI College, completed Electro-Mechanical Technologies at Tulsa Welding School, and finished the Carpentry program at Florida State College at Jacksonville. Today, I combine my technical background and craftsmanship by building furniture using traditional woodworking methods, gardening, and developing helpful online tools for users worldwide.