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Recapture vs 1031 Calculator
Selling taxable: §1250 recapture at 25% on depreciation + capital gain at 20% (federal) on the rest. 1031 exchange: defer everything for a small exchange fee. This calculator runs both scenarios side by side so you can quantify the tax savings of an exchange.
Tax savings from 1031
$366,500
Tax owed if taxable sale
$372,500
Total realized gain
$1,700,000
§1250 recapture portion
$650,000
Capital gain portion
$1,050,000
1031 exchange fees
$6,000
How the math works
Compare taxable sale to 1031 exchange. Taxable sale: §1250 recapture on accumulated depreciation at 25% + capital gain on the rest at 20% (federal). 1031 defers everything at the cost of exchange fees (~$5-10K). Savings compound if you 1031 again at next sale.
NIIT (Net Investment Income Tax) adds 3.8% on top of capital gain rate for high earners. State tax adds 5-13% in most states. Total taxable-exit rate can reach 40%+ for high-income sellers in CA, NY, NJ.
How to Use
- Enter sale price, adjusted basis, and accumulated depreciation.
- Enter capital gain rate and §1250 recapture rate.
- Enter 1031 exchange fees.
- Read tax savings from exchange.
Frequently Asked Questions
Include state tax?
Add state rate on top of capital gain (CA 13.3%, NY 10.9%, etc.) and ordinary (for NIIT). For high-income sellers in high-tax states, total exit tax can reach 40%+. 1031 defers state tax in most states too.
NIIT?
Net Investment Income Tax = 3.8% additional on investment income for earners above $200K single / $250K joint. Applies to capital gain but not to §1250 recapture. 1031 defers the gain and thus NIIT.
1031 timeline reminder?
45 days to identify replacement, 180 days to close. Miss either and the exchange fails — full taxable sale treatment applies. Use a qualified intermediary.
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