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Depreciation Recapture Calculator

Estimate depreciation recapture tax and optional capital gains tax for a real estate sale.

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Results

Estimated Recapture Tax
Estimated Taxable Gain$191,000.00
Optional Capital Gains Tax$10,650.00
Total Estimated Tax$40,650.00

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Assumptions

  • All values, dates, rates, and tax assumptions are entered by the user.
  • Calculations run locally in your browser and are not stored by Calwarden.
  • Results are planning estimates only and are not tax, legal, accounting, lending, or investment advice.

Sensitivity preview

Accumulated Depreciation -10%: Estimated Recapture Tax $27,000.00

Accumulated Depreciation Current: Estimated Recapture Tax $30,000.00

Accumulated Depreciation +10%: Estimated Recapture Tax $33,000.00

Formula: Recapture tax = accumulated depreciation x recapture rate. Optional capital gains tax = max(0, sale price - selling costs - adjusted basis - accumulated depreciation) x capital gains rate.

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About this Depreciation Recapture Calculator

Depreciation can reduce taxable rental income during ownership, but accumulated depreciation may create recapture tax when the property is sold. This calculator estimates that exposure from your own assumptions.

Who this calculator is for

  • Rental property owners estimating sale taxes before listing.
  • Investors comparing sale, hold, and exchange scenarios.
  • Advisors preparing a rough discussion estimate before detailed tax modeling.

When to use it

  • Estimate recapture tax from accumulated depreciation.
  • Add a simplified capital gains tax estimate for a sale scenario.
  • Compare tax exposure with potential 1031 exchange planning.

How to use this calculator

  1. Enter accumulated depreciation taken or allowed.
  2. Enter the recapture tax rate you want to test.
  3. Optionally enter sale price, adjusted basis, selling costs, and capital gains tax rate.

Key assumptions

  • All values, dates, rates, and tax assumptions are entered by the user.
  • Calculations run locally in your browser and are not stored by Calwarden.
  • Results are planning estimates only and are not tax, legal, accounting, lending, or investment advice.

Accuracy and testing

Review formula sources, default test cases, assumptions, unit handling, rounding rules, and changelog for this calculator.

View accuracy page

How this calculator works

Estimated recapture tax = accumulated depreciation x recapture tax rate. Optional taxable gain estimate = max(0, sale price - selling costs - adjusted basis). Optional capital gains tax = max(0, taxable gain - accumulated depreciation) x capital gains tax rate.
Recapture tax = accumulated depreciation x recapture rate. Optional capital gains tax = max(0, sale price - selling costs - adjusted basis - accumulated depreciation) x capital gains rate.

Inputs explained

Accumulated depreciation

Total depreciation taken or allowable during ownership. Tax rules can require recapture based on depreciation allowed, not only what was actually claimed.

Recapture tax rate

Your assumed depreciation recapture rate. Enter the rate you want to test with your tax advisor.

Sale price and adjusted basis

Used only for the optional capital gains estimate. Adjusted basis should reflect your tax basis after improvements and depreciation.

Understanding your results

The primary output is estimated recapture tax. The capital gains outputs are simplified and should be treated as conversation starters for tax planning, not filing numbers.

Example scenarios

Rental sale estimate

If accumulated depreciation is $120,000 and the assumed recapture rate is 25%, estimated recapture tax is $30,000 before considering state taxes or other sale facts.

Key Features

  • Depreciation recapture estimate
  • Optional capital gain tax estimate
  • User-entered rates and tax assumptions

Things to Keep in Mind

This simplified model does not handle land/building allocations, unrecaptured Section 1250 gain limits, ordinary income recapture, passive activity rules, state taxes, installment-sale treatment, AMT, or 1031 exchange mechanics. Consult qualified professionals.

Tips & Best Practices

  • Ask your tax professional to confirm accumulated depreciation from your tax records.
  • Run separate cases for federal and state assumptions if state tax applies.
  • Do not use this estimate to decide on a 1031 exchange without professional advice.

Glossary of Terms

Accumulated depreciation
Total depreciation deductions taken or allowable against the property over time.
Adjusted basis
A tax basis measure that may include purchase price and improvements, reduced by depreciation and adjusted by other tax items.
Recapture tax
Tax that may apply when prior depreciation deductions are recaptured at sale.

Frequently Asked Questions

Is depreciation recapture always taxed at 25%?
No. Many planning examples use 25% as an assumption, but your actual rate and gain character depend on tax law and your facts. Enter the rate your advisor wants you to test.
What if I forgot to claim depreciation?
Tax rules may still treat depreciation as allowable. Ask a qualified tax professional before relying on a sale estimate.
Does this calculate my final tax bill?
No. It is a simplified planning estimate and excludes many federal, state, and transaction-specific tax rules.