Real Estate Depreciation Recapture Calculator

Depreciation recapture is taxed at 25% federal rate, separate from capital gains.

Sale price

Original basis

Total depreciation taken

Federal recapture rate %

State rate %

Total recapture tax

$54,000

Federal recapture

$45,000

State recapture

$9,000

How the math works

Recapture amount = min(depreciation taken, gain). Tax = recapture × (fed + state) rate.

$180k recapture × (25% + 5%) = $54,000 total recapture tax.

How to Use

Enter sale price.
Enter original basis.
Enter total depreciation taken.
Enter federal recapture rate %.
Enter state rate %.
Read total recapture tax.

Frequently Asked Questions

Recapture tax mechanics?

Section 1250 (real estate): unrecaptured depreciation taxed at 25% federal max. Section 1245 (personal property like equipment, cost-seg components): ordinary income tax rate (up to 37%). State tax additional 0–13.3%. 1031 exchange defers all taxes including recapture. Step-up at death wipes out depreciation recapture (heir's basis = FMV). Best practice: model recapture upfront when purchasing depreciation-heavy asset; consider exchange or hold-until-death strategies.

How is this tax impact computed?

Tax outcomes depend on filing status, income bracket, depreciation schedule, basis adjustments, AMT exposure, and state conformity. Real estate tax planning typically involves cost segregation, 1031 exchanges, opportunity zone, depreciation recapture, passive activity rules, and entity structure (LLC vs partnership vs S-corp). This calculator provides directional analysis — final position requires CPA review.

State conformity?

States vary on conformity to federal tax code: California, NY, MA decouple selectively. Bonus depreciation: most states reduce or eliminate. QBI: most states don't conform. Section 1031: federal-only deferral, some states require state-level recapture. Property tax cap: state-specific (CA Prop 13, MI Headlee, FL SOH). Multi-state property requires apportionment analysis.

When to prioritize this strategy?

Tax strategies have setup cost, complexity, and audit risk. Cost segregation: $5–15k study, materially helps high-basis investors. 1031: 45/180 day deadlines, identification rules, qualified intermediary fees. Opportunity Zone: long hold required. Stack strategies: don't double-count benefits. CPA + tax attorney coordination essential for $1M+ strategies.