Depreciation Recapture Tax 2027 Calculator

Calculate depreciation recapture tax 2027 — 25% rate on accumulated rental depreciation at sale. Often surprises investors. Compare with 1031 to defer.

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Depreciation Recapture Defined

Sell rental property = IRS recaptures depreciation taken. Taxed at 25% rate (capped, sometimes lower if you're in lower bracket). Often forgotten in sale planning.

Section 1250 Gain

Unrecaptured Section 1250 gain. Applies to real property depreciation. Personal property recaptured under Section 1245 at full ordinary rates.

1031 Exchange Defers

Like-kind exchange defers all gain including recapture. Roll into next rental property. Can chain forever — die with portfolio = step-up basis to heirs.

State Tax Add-On

Most states tax recapture as ordinary income. Some at ordinary capital gains rate. Often 5-10% extra on top of federal 25%.

Source: irs.gov Publication 544 Section 1250, IRS Form 4797. Last updated: May 2026.