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.
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.
Frequently Asked Questions
Can I skip depreciation?
No — IRS REQUIRES you to depreciate. Recapture happens whether you took it or not. Always claim it.
Depreciation on land?
NO. Land doesn't depreciate. Only building improvements. Allocate land 15-25% of purchase typically.
What about partial sale?
Pro-rata recapture on portion sold. Complex if mixed personal/rental use. Get CPA.