{
  "id": "depreciation-recapture",
  "version": "cef4ba014742",
  "status": "published",
  "name": "Depreciation Recapture Calculator",
  "question": "What is my depreciation recapture?",
  "summary": "Estimates the 2026 federal tax on depreciation recapture when you sell a rental property or business equipment at a gain: unrecaptured section 1250 gain at up to 25%, or section 1245 ordinary income.",
  "category": "finance",
  "subcategory": "tax-and-pay",
  "url": "https://www.acalculator.org/finance/depreciation-recapture-calculator",
  "markdown": "https://www.acalculator.org/finance/depreciation-recapture-calculator.md",
  "kind": "function",
  "method": "Adjusted basis = cost basis − depreciation. Gain = sale price − selling costs − adjusted basis. Recapture = the smaller of the gain and the depreciation. Tax on the recapture = tax on (other income + recapture) − tax on other income; tax on the rest = tax on everything − tax on (other income + recapture), each by the Schedule D Tax Worksheet with the 2026 rates.",
  "assumptions": [
    "The property was held more than 1 year. A building was depreciated by the straight-line MACRS method, so its recapture is unrecaptured section 1250 gain (taxed at ordinary rates, at most 25%); equipment recapture is ordinary income.",
    "No other capital gains, losses, qualified dividends or section 1231 losses in the year; other taxable income is all ordinary.",
    "Federal income tax only: the 3.8% net investment income tax and state tax are not included.",
    "Arithmetic is exact; the Tax Table rounds to whole dollars, and money shows to the cent, halves rounded up."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "type": {
        "title": "Property",
        "description": "Real property such as a rental house or building (section 1250), or equipment, vehicles and furniture (section 1245).",
        "type": "string",
        "enum": [
          "1250",
          "1245"
        ]
      },
      "price": {
        "title": "Sale price",
        "description": "What the buyer paid for the property.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "costs": {
        "title": "Selling costs",
        "description": "Commissions, legal fees and other costs of the sale. Optional; empty counts as $0.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "basis": {
        "title": "Original cost basis",
        "description": "What you paid for the property, plus improvements and buying costs (land included for a building).",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "dep": {
        "title": "Depreciation taken",
        "description": "All the depreciation allowed or allowable on the property, section 179 and bonus included.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "status": {
        "title": "Filing status",
        "description": "Your filing status for the 2026 return.",
        "type": "string",
        "enum": [
          "single",
          "mfj",
          "mfs",
          "hoh",
          "qss"
        ]
      },
      "income": {
        "title": "Other taxable income",
        "description": "Your 2026 taxable income without this sale (after deductions), from wages and other ordinary income.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      }
    }
  },
  "outputs": {
    "recaptureTax": {
      "label": "Tax on the depreciation recapture",
      "description": "The tax with the recapture added to your other income, less the tax on the other income alone.",
      "format": "money"
    },
    "recapture": {
      "label": "Depreciation recapture",
      "description": "The smaller of the gain and the depreciation taken: unrecaptured section 1250 gain, or section 1245 ordinary income.",
      "format": "money"
    },
    "gainTax": {
      "label": "Tax on the rest of the gain",
      "description": "The extra tax when the rest of the gain is added on top, at the 0%, 15% and 20% rates.",
      "format": "money"
    },
    "tax": {
      "label": "Total federal tax on the sale",
      "description": "The tax with the sale less the tax without it: recapture tax + tax on the rest of the gain.",
      "format": "money"
    },
    "gain": {
      "label": "Gain on the sale",
      "description": "Sale price − selling costs − adjusted basis.",
      "format": "money"
    },
    "adjusted": {
      "label": "Adjusted basis",
      "description": "Original cost basis − depreciation taken.",
      "format": "money"
    },
    "capitalGain": {
      "label": "Rest of the gain",
      "description": "Gain − recapture: section 1231 gain, taxed as long-term capital gain.",
      "format": "money"
    },
    "recaptureRate": {
      "label": "Average rate on the recapture",
      "description": "Tax on the recapture ÷ recapture × 100. Not shown when there is no recapture.",
      "format": "percent"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "type": "1250",
      "price": 400000,
      "costs": 20000,
      "basis": 300000,
      "dep": 50000,
      "status": "single",
      "income": 80000
    },
    "outputs": {
      "recaptureTax": 11480,
      "recapture": 50000,
      "gainTax": 12000,
      "tax": 23480,
      "gain": 130000,
      "adjusted": 250000,
      "capitalGain": 80000,
      "recaptureRate": 22.96
    },
    "text": "Selling for $400,000.00 with $50,000.00 of depreciation taken recaptures $50,000.00, which adds $11,480.00 of 2026 federal tax ($23,480.00 for the whole sale)."
  },
  "examples": [
    {
      "given": {
        "type": "1250",
        "price": 400000,
        "costs": 20000,
        "basis": 300000,
        "dep": 50000,
        "status": "single",
        "income": 80000
      },
      "expect": {
        "recaptureTax": 11480,
        "recapture": 50000,
        "gainTax": 12000,
        "tax": 23480,
        "gain": 130000,
        "adjusted": 250000,
        "capitalGain": 80000,
        "recaptureRate": 22.96
      },
      "source": "IRS, Publication 544 (2025), Sales and Other Dispositions of Assets, chapter 3, https://www.irs.gov/publications/p544: the gain from depreciation on section 1250 property is unrecaptured section 1250 gain; hand calculation in content.mdx (Schedule D Tax Worksheet, 2026 rates); Python 3 check in docs/progress/WP-137/xcheck.py"
    },
    {
      "given": {
        "type": "1245",
        "price": 7000,
        "costs": 0,
        "basis": 10000,
        "dep": 6160,
        "status": "single",
        "income": 50000
      },
      "expect": {
        "recapture": 3160,
        "gain": 3160,
        "adjusted": 3840,
        "capitalGain": 0,
        "recaptureTax": 656,
        "gainTax": 0,
        "tax": 656,
        "recaptureRate": 20.759493670886076
      },
      "source": "IRS, Publication 544 (2025), Sales and Other Dispositions of Assets, chapter 3, https://www.irs.gov/publications/p544, section 1245 example: adjusted basis $3,840, gain $3,160, all of it ordinary income; hand calculation in content.mdx (Schedule D Tax Worksheet, 2026 rates); Python 3 check in docs/progress/WP-137/xcheck.py"
    },
    {
      "given": {
        "type": "1250",
        "price": 1000000,
        "costs": 0,
        "basis": 600000,
        "dep": 200000,
        "status": "mfj",
        "income": 300000
      },
      "expect": {
        "recapture": 200000,
        "recaptureTax": 48964.5,
        "gainTax": 69492.5,
        "tax": 118457,
        "recaptureRate": 24.48225
      },
      "source": "hand calculation in content.mdx (Schedule D Tax Worksheet, 2026 rates); Python 3 check in docs/progress/WP-137/xcheck.py: $103,550 of the recapture at 24% and $96,450 above the 32% bracket floor at 25%; the rest at 15% and 20%"
    },
    {
      "given": {
        "type": "1250",
        "price": 250000,
        "costs": 0,
        "basis": 260000,
        "dep": 40000,
        "status": "hoh",
        "income": 0
      },
      "expect": {
        "gain": 30000,
        "recapture": 30000,
        "capitalGain": 0,
        "recaptureTax": 3249,
        "tax": 3249,
        "recaptureRate": 10.83
      },
      "source": "hand calculation in content.mdx (Schedule D Tax Worksheet, 2026 rates); Python 3 check in docs/progress/WP-137/xcheck.py: a gain smaller than the depreciation is all recapture; taxable income $30,000 at head of household rates (Tax Table)"
    }
  ],
  "sources": [
    "IRS, Publication 544 (2025), Sales and Other Dispositions of Assets, chapter 3: section 1245 ordinary income is the lesser of the depreciation allowed or allowable and the gain realized; any gain beyond it is section 1231 gain; the light-duty truck example ($10,000 cost, $6,160 of deductions, $7,000 sale, $3,160 ordinary income); straight-line MACRS real property held over 1 year has no additional depreciation; chapter 4: the maximum capital gains rates are 0%, 15%, 20%, 25% and 28%, and unrecaptured section 1250 gain is the part of a long-term gain on real property due to depreciation. https://www.irs.gov/publications/p544 (retrieved 2026-10-19)",
    "IRS, 2025 Instructions for Schedule D (Form 1040), Schedule D Tax Worksheet, lines 1 to 47. https://www.irs.gov/instructions/i1040sd (retrieved 2026-10-19)",
    "IRS, Rev. Proc. 2025-32 (Internal Revenue Bulletin 2025-45), section 4.01, 2026 tax rate tables, and section 4.03, maximum capital gains rate thresholds. https://www.irs.gov/irb/2025-45_IRB (retrieved 2026-10-19)",
    "Cornell Law School, Legal Information Institute, 26 U.S. Code § 1(h)(1): unrecaptured section 1250 gain taxed at 25%, on income above the amount taxed at a rate below 25%. https://www.law.cornell.edu/uscode/text/26/1 (retrieved 2026-10-19)"
  ],
  "related": [
    "macrs-depreciation",
    "rental-property-depreciation",
    "capital-gains-tax"
  ],
  "changelog": []
}