Every dollar of depreciation you deducted over the years comes back due at sale. This isolates just that bill, separate from the rest of your gain.
Assumes 2026 federal rules. Section 1245 items may follow different depreciation schedules.
Those ordinary-income options are for Section 1245 property, equipment or vehicles sold alongside the building, not the real property itself. Pick your marginal tax bracket for that portion instead of 25%.
Recapture is capped at your total gain, so the calculator only recaptures up to that amount and leaves nothing for the remaining capital gain line.
No. With no gain, there's nothing for the recapture calculation to attach to, regardless of how much depreciation you claimed over the years.
No, only the recaptured portion is taxed at the rate you selected. Whatever gain is left over is ordinary long-term capital gain, taxed separately at 0%, 15%, or 20%.
A 1031 exchange defers recapture along with the rest of the gain by rolling it into the replacement property's basis. It doesn't erase the liability, just postpones it.
| Option | Rate |
|---|---|
| Real estate, Section 1250 | 25% |
| Personal property, ordinary bracket | 32% |
| Personal property, ordinary bracket | 24% |
Every year a rental sits on your books, you deduct depreciation against ordinary income. The IRS tracks the running total. Sell the property, and that total comes back due, taxed at up to 25% under Section 1250, no matter what rate the rest of your gain would otherwise draw. Owners who assumed their whole gain would land at 15% or 20% are routinely surprised by this line item.
See how this bill sits inside the full sale math on the capital gains tax calculator, or check what a like-kind swap would defer with the 1031 exchange calculator.