The federal tax due on a real estate sale if you skip the 1031 exchange.
Educational estimate using common 2026 rates. Not tax advice.
The calculator computes your gain (sale price minus selling expenses and adjusted basis), taxes the depreciation portion at 25% under Section 1250, and applies your selected long-term capital gains rate to the remainder. If you select NIIT, 3.8% applies to the full gain on top.
Compare this against what you would defer with the 1031 exchange calculator.
This is the bill the IRS presents when you sell without a 1031. Two taxes stack up: depreciation recapture at 25% under Section 1250 on the portion of gain attributable to prior deductions, and long-term capital gains at 0%, 15%, or 20% on the rest. Taxpayers above certain income thresholds owe an additional 3.8% NIIT on top.
On a $170,000 gain that includes $60,000 of past depreciation, recapture tax is $15,000. The remaining $110,000 taxed at 20% adds $22,000. NIIT adds another several thousand. The total is a meaningful number, which explains why investors run the 1031 exchange numbers before deciding.
Gain equals sale price minus selling expenses and adjusted basis. The portion of that gain attributable to prior depreciation deductions is taxed at 25% under Section 1250. The remaining capital gain is taxed at your long-term rate (0%, 15%, or 20%).
The 3.8% Net Investment Income Tax applies to net investment income for taxpayers above certain income thresholds. It applies to the full gain, not just the capital gains portion.
Unrecaptured Section 1250 gain is taxed at a maximum 25%. It applies to the portion of gain equal to prior depreciation deductions, capped at total gain.
A 1031 like-kind exchange can defer both recapture and capital gains. See the 1031 exchange calculator.
No. It is an educational estimate. Consult a tax professional.