# What is my depreciation recapture?

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.

- Page: https://www.acalculator.org/finance/depreciation-recapture-calculator
- JSON spec: https://www.acalculator.org/finance/depreciation-recapture-calculator.json
- Version: cef4ba014742

## Default answer

Example with the default inputs (Property Building (real property), Sale price $400,000.00, Selling costs $20,000.00, Original cost basis $300,000.00, Depreciation taken $50,000.00, Filing status Single, Other taxable income $80,000.00): 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).

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| type | Property | Real property such as a rental house or building (section 1250), or equipment, vehicles and furniture (section 1245). |
| price | Sale price | What the buyer paid for the property. |
| costs | Selling costs | Commissions, legal fees and other costs of the sale. Optional; empty counts as $0. |
| basis | Original cost basis | What you paid for the property, plus improvements and buying costs (land included for a building). |
| dep | Depreciation taken | All the depreciation allowed or allowable on the property, section 179 and bonus included. |
| status | Filing status | Your filing status for the 2026 return. |
| income | Other taxable income | Your 2026 taxable income without this sale (after deductions), from wages and other ordinary income. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| recaptureTax | Tax on the depreciation recapture | The tax with the recapture added to your other income, less the tax on the other income alone. |
| recapture | Depreciation recapture | The smaller of the gain and the depreciation taken: unrecaptured section 1250 gain, or section 1245 ordinary income. |
| gainTax | Tax on the rest of the gain | The extra tax when the rest of the gain is added on top, at the 0%, 15% and 20% rates. |
| tax | Total federal tax on the sale | The tax with the sale less the tax without it: recapture tax + tax on the rest of the gain. |
| gain | Gain on the sale | Sale price − selling costs − adjusted basis. |
| adjusted | Adjusted basis | Original cost basis − depreciation taken. |
| capitalGain | Rest of the gain | Gain − recapture: section 1231 gain, taxed as long-term capital gain. |
| recaptureRate | Average rate on the recapture | Tax on the recapture ÷ recapture × 100. Not shown when there is no recapture. |

## 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.

## Worked examples

1. type = 1250, price = $400,000.00, costs = $20,000.00, basis = $300,000.00, dep = $50,000.00, status = single, income = $80,000.00 gives recaptureTax = $11,480.00, recapture = $50,000.00, gainTax = $12,000.00, tax = $23,480.00, gain = $130,000.00, adjusted = $250,000.00, capitalGain = $80,000.00, 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; (Schedule D Tax Worksheet, 2026 rates).
2. type = 1245, price = $7,000.00, costs = $0.00, basis = $10,000.00, dep = $6,160.00, status = single, income = $50,000.00 gives recapture = $3,160.00, gain = $3,160.00, adjusted = $3,840.00, capitalGain = $0.00, recaptureTax = $656.00, gainTax = $0.00, tax = $656.00, recaptureRate = 20.759494%. 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; (Schedule D Tax Worksheet, 2026 rates).
3. type = 1250, price = $1,000,000.00, costs = $0.00, basis = $600,000.00, dep = $200,000.00, status = mfj, income = $300,000.00 gives recapture = $200,000.00, recaptureTax = $48,964.50, gainTax = $69,492.50, tax = $118,457.00, recaptureRate = 24.48225%. Source: (Schedule D Tax Worksheet, 2026 rates).
4. type = 1250, price = $250,000.00, costs = $0.00, basis = $260,000.00, dep = $40,000.00, status = hoh, income = $0.00 gives gain = $30,000.00, recapture = $30,000.00, capitalGain = $0.00, recaptureTax = $3,249.00, tax = $3,249.00, recaptureRate = 10.83%. Source: (Schedule D Tax Worksheet, 2026 rates).

## FAQ

### What is depreciation recapture?

Depreciation lowers your basis, so when you sell at a gain, part of the gain is really the depreciation you deducted earlier. That part is recaptured: taxed at a different rate than an ordinary long-term capital gain. It is the smaller of the gain and the depreciation taken.

### How is depreciation recapture taxed on a rental property?

A rental building is section 1250 property, depreciated by straight line, so its recapture is unrecaptured section 1250 gain. It is taxed at your ordinary income tax rates, but never more than 25%. The rest of the gain is taxed at the 0%, 15% or 20% capital gains rates.

### How is recapture taxed on equipment?

Equipment, vehicles and furniture are section 1245 property. The recapture is ordinary income, taxed at your regular rates with no 25% cap. A truck that cost $10,000, with $6,160 of depreciation, sold for $7,000, has a $3,160 gain, and all of it is ordinary income.

### How do I calculate depreciation recapture?

Adjusted basis = what you paid − depreciation. Gain = sale price − selling costs − adjusted basis. Recapture = the smaller of the gain and the depreciation. A house bought for $300,000, depreciated by $50,000 and sold for $400,000 with $20,000 of costs has a $130,000 gain, of which $50,000 is recapture.

### Why is my recapture taxed at less than 25%?

25% is the most it can be taxed at. The part of the recapture that falls in the 10%, 12%, 22% or 24% brackets (stacked on your other income) is taxed at those rates; only the part above the top of the 24% bracket pays 25%.

### Do I pay recapture on depreciation I did not take?

Yes. The rules use depreciation allowed or allowable: if you could have deducted it but did not, it still lowers your basis and still counts. Enter the depreciation you were entitled to.

### What does this calculator leave out?

The 3.8% net investment income tax, state tax, other capital gains or losses in the same year, section 1231 losses, installment sales, like-kind exchanges, and the home sale exclusion. It also assumes you held the property for more than 1 year.

## 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)