Calculators · Recapture
Depreciation Recapture Calculator
How much of your gain is depreciation, the rate the unrecaptured section 1250 layer is actually taxed at once it stacks on your income, the ordinary-income section 1245 slice, and what an exchange defers.
What this calculator does
Every dollar of depreciation you claimed, or could have claimed, lowered your basis and comes back as gain when you sell. On a building depreciated in a straight line that gain is unrecaptured section 1250 gain, taxed at your ordinary rates but never above 25%. Components reclassified as personal property by a cost segregation study are section 1245 property, recaptured as ordinary income at your full marginal rate.
Enter the depreciation and your other income and the calculator shows each slice and its rate. For the whole sale, including the capital gain layers and state tax, use the 1031 exchange calculator.
Recapture by layer
How the numbers are calculated
The section 1245 slice is taxed first at ordinary rates with no cap, stacked on other taxable income (other income less the 2026 standard deduction). The unrecaptured section 1250 slice is stacked above it at ordinary rates and capped at 25% under section 1(h)(1)(E). Both slices together are limited to the total gain; if the gain is smaller, the section 1245 slice is filled first.
The 3.8% net investment income tax is shown separately because it applies to the gain regardless of character, above $250,000 joint or $200,000 single of modified adjusted gross income.
Questions about this calculator
I never claimed depreciation. Do I still owe recapture?
Yes. Basis is reduced by depreciation allowed or allowable, so the IRS computes the layer as if you had claimed it. A Form 3115 catch-up before the sale at least gives you the deductions. See recapture on never-claimed depreciation.
Is recapture always 25%?
No. Unrecaptured section 1250 gain is taxed at ordinary rates with a 25% ceiling, so part of the layer can be taxed at 22% or 24% for a seller with modest other income. Section 1245 components from a cost segregation study are ordinary income with no cap.
Does a 1031 exchange defer recapture?
Yes. The deferred layer rides in the replacement property's basis and comes back only when you sell for cash, or never if you hold to death. See does a 1031 defer depreciation recapture.
What if my gain is smaller than my depreciation?
The unrecaptured section 1250 layer is limited to the total gain, so the whole gain sits in the 25%-capped layer and nothing reaches the 15% or 20% rates. See gain smaller than depreciation.
Sources
Figures checked on September 30, 2026. Rates and thresholds change each year; this page is general information, not tax or legal advice.
A calculator is a starting point. A proposal is a plan.
Send us the sale details and we will show how a DST, a cash out DST or a direct title security would absorb the exact figures, inside your deadlines.
Free 1031 proposal
Access Investment Offerings Other Brokers Can’t Provide
Breakwater Exchange’s expert guidance helps you maximize returns while minimizing tax exposure, so you can invest with clarity and confidence.
- years of experience
- 20+
- in DST transactions
- $1B+
- states licensed
- 50
- vetted national sponsors
- 8