Depreciation Recapture Calculator
Calculate depreciation recapture tax owed when selling rental property investments
About this calculator
The Depreciation Recapture Calculator helps real estate investors determine the tax liability they'll face when selling rental properties. When you claim depreciation deductions during property ownership, the IRS requires you to 'recapture' and pay taxes on those deductions upon sale at a rate of up to 25%. This calculator computes your depreciation recapture tax obligation, helping you plan for the financial impact and make informed decisions about property sales and tax strategies.
How to use
Enter your property's original purchase price, total depreciation claimed over the ownership period, and current sale price. The calculator will determine your depreciation recapture amount and estimate the tax owed at the applicable recapture rate, giving you a clear picture of your tax liability.
Frequently asked questions
What is the depreciation recapture tax rate?
The depreciation recapture tax rate is typically 25% for real estate, though it may be lower if your ordinary income tax rate is less than 25%.
Can I avoid depreciation recapture tax?
You can defer it through a 1031 like-kind exchange, but you cannot permanently avoid recapture tax on claimed depreciation when selling rental property.
Do I owe recapture tax even if I never claimed depreciation?
Yes, the IRS assumes you claimed allowable depreciation whether you actually did or not, so recapture tax may still apply.