Depreciation Recapture Calculator
Estimate taxes due when selling rental property, including Section 1250 recapture
Selling a rental often brings a surprising tax bill. This calculator breaks down the recapture tax (your ordinary rate, up to 25%), capital gains, and NIIT so you know exactly what to expect.
How is depreciation recapture tax calculated?
When selling rental property, recapture of the building's depreciation is taxed at a maximum rate of 25% (Section 1250). Calculate by taking the lesser of: total depreciation allowed or allowable on the building OR total gain on sale. This amount is taxed separately from capital gains, which are taxed at 0%, 15%, or 20%. Depreciation on personal property (Section 1245) comes back as ordinary income at your full rate.
- •25% max rate on the building's depreciation allowed or allowable
- •Section 1245 (appliances, furniture, cost-seg 5/7-year) recapture: ordinary income
- •Taxed whether you claimed depreciation or not
- •1031 exchange can defer recapture tax
- •NIIT adds 3.8% for high earners
Depreciation recapture is the IRS's way of clawing back the tax breaks you took on the way up. It's the single biggest sale-time surprise for landlords, and it's why investors who never planned for an exit get hit with a tax bill larger than they expected — even on a property they bought 'for the cash flow.'
Real-world scenario
Sold a 12-year rental, $80K total depreciation taken
Purchase price 2013: $260K. Sold 2025: $480K. Cumulative depreciation: $80K, which lowers the basis to $180K, so the gain is $300K. For a married couple filing jointly with $150K of other income, the $80K of unrecaptured Section 1250 gain falls in their 22% bracket: $17,600 (the rate on this slice never goes above 25%). The other $220K is long-term capital gain at 15%: $33,000. NIIT of 3.8% applies to the $200K of income above the $250K threshold: $7,600. Total federal tax at sale: $58,200, before state.
The part most people miss
The IRS recaptures depreciation you should have taken even if you skipped it. New landlords sometimes 'don't bother' with depreciation thinking they're being conservative. They aren't — they're just paying tax on phantom deductions at sale. Always claim depreciation, or file Form 3115 to catch up missed years before selling.
Sale Details
Everything you deducted on the building, plus any depreciation you were entitled to but didn't claim — the IRS reduces your basis by the larger amount (Pub 544).
Appliances, furniture, carpet and cost-segregated 5- and 7-year property sold with the rental, plus any bonus or accelerated depreciation above straight-line on 15-year land improvements. That recapture is ordinary income taxed at your full rate (Pub 544), not capped at 25%.
Starts at the 2026 standard deduction for your filing status. Enter your itemized total if it's larger.
The year of the sale. Brackets, capital-gain bands and the standard deduction change each year.
Enter Sale Details
Fill in the form to estimate taxes when selling your rental property
Consider a 1031 Exchange
You can defer these taxes by reinvesting in another property through a 1031 exchange.Calculate 1031 savings →
Sources & References
Primary references used for this content
Sales and Other Dispositions of Assets
Gain/loss character, recapture, and like-kind exchanges
View on irs.gov
Sales of Business Property
Business-property gain and depreciation recapture
View on irs.gov
Gain from dispositions of depreciable realty
Unrecaptured §1250 gain, taxed at ordinary rates up to 25%
View on law.cornell.edu
✓3 primary sources; links re-checked on a weekly rotation by the source watcher
Disclaimer: This calculator provides estimates for educational purposes only. Not tax, legal, or financial advice. Results may vary based on your specific circumstances. Consult a qualified CPA or tax professional for personalized guidance.