Depreciation Recapture Tax Calculator

How it is calculated

This is a US-style estimate for a rental property; other countries tax property sales differently. adjusted basis = purchase price − accumulated depreciation and total gain = sale price − adjusted basis. If the gain is zero or negative, every tax line is $0.00. Otherwise the gain is split: recaptured = min(accumulated depreciation, gain) is taxed at the recapture rate, and remaining gain = gain − recaptured is taxed at the capital gains rate. total tax = recaptured × recapture rate + remaining gain × capital gains rate. Empty rate fields default to 25 % for recapture and 15 % for long-term gains. Rates are entered as percentages from 0 to 100. Accumulated depreciation cannot exceed the purchase price, and the purchase price must be above zero, otherwise there is no result. Flat rates are used; selling costs, improvements, state tax, the net investment income tax and loss rules are not included, so treat the result as a rough guide.

Common mistakes

• Entering depreciation you plan to claim in future, or leaving it at 0 because you never took it. The recapture is calculated from the accumulated depreciation you enter, so use the full amount from your tax records.
• Entering rates as fractions (0.25 and 0.15). They are percentages: with 0.25 and 0.15 the same sale shows a total tax of $335.00 instead of $33,500.00.
• Mixing a net sale price (after commissions and closing costs) with a gross figure elsewhere. The tool does not deduct selling costs, so enter the one figure that matches how your tax rules treat them.
• Applying the capital gains rate to the depreciation part as well. Here the depreciation portion uses the separate, usually higher, recapture rate.
• Assuming a sale below the purchase price is tax-free. With 250,000 purchase, 80,000 depreciation and a 200,000 sale, the gain is still 30,000 above the 170,000 basis and the tool shows $7,500.00 of recapture tax.