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Depreciation Recapture Bridge Calculator
Recapture tax hits the depreciated portion at exit.
Total tax on gain
$890,000
Recapture tax
$450,000
LTCG tax
$440,000
How the math works
Recapture tax = depreciation × 25%. LTCG tax = LTCG portion × rate. Total = sum.
$1.8M × 25% = $450k recapture. $2.2M × 20% = $440k LTCG. Total $890k tax — 22% of $4M combined gain.
How to Use
- Enter total depreciation taken.
- Enter recapture rate %.
- Enter long-term capital gain portion.
- Enter LTCG rate %.
- Read total tax on gain.
Frequently Asked Questions
What is recapture?
Depreciation previously deducted must be 'recaptured' at exit. Section 1250 gain (straight-line depreciation) taxed at 25% federal. Section 1245 gain (accelerated, personal property) taxed at ordinary rates. Recapture separate from general long-term gain (20% federal).
Typical magnitudes?
Held 10 years with $100k/yr straight-line depreciation: $1M recapture at 25% = $250k. Plus LTCG on appreciation: $500k × 20% = $100k. Total tax $350k on $1.5M total gain. Depreciation tax shield partially reversed but not fully — net wins.
Strategies?
1031 exchange: defers recapture. QOZ: defers recapture plus long-term elimination. Installment sale: spreads recapture. Cost segregation: accelerates depreciation (more current savings but more recapture). Step-up at death: eliminates recapture (estate planning value).
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