Depreciation Recapture Calculator
Calculate depreciation recapture tax on sale of rental property: Section 1250 unrecaptured gain taxed at 25% federal rate.
| Adjusted Basis (Original + Imp - Depreciation) | — |
| Total Realized Gain | — |
| Depreciation Recapture (Section 1250) | — |
| Capital Gain (Above Recapture) | — |
| Section 1250 Tax @ 25% Federal | — |
| Long-Term Cap Gain Tax @ 15-20% | — |
| State Tax (Combined) | — |
Calculate depreciation recapture tax on sale of rental property: Section 1250 unrecaptured gain taxed at 25% federal rate. Cite official methodology in your communications — sources linked below.
How the Calculation Works
When you sell a rental or business property, the IRS recaptures the depreciation you took (saved on tax in prior years) at a 25% federal rate. This Section 1250 unrecaptured gain is in addition to regular long-term capital gains on appreciation above recapture amount. Source: IRC §1250, IRS Pub 544.
Benchmarks and Use Cases
Standard rental property gets 27.5-year straight-line depreciation. A $300k building (excluding land) generates ~$10,900/yr depreciation. Hold 10 years = $109,000 depreciation taken. On sale, that $109k is recaptured at 25% = $27,250 federal tax owed. Plus regular capital gains on appreciation above $300k cost basis.
Common Mistakes and Limitations
Common mistakes: (1) Forgetting depreciation was MANDATORY — even if you did not claim it, IRS calculates "allowed or allowable" recapture. (2) Failing to track depreciation per Year via Form 4562. (3) Not considering 1031 like-kind exchange — defers entire tax indefinitely. (4) Selling close to death — heirs get stepped-up basis to FMV, wiping all deferred depreciation tax.
Last updated May 2026. Sources: IRC §1250, IRS Pub 544.