The tax bill hiding in your old tax returns

Depreciation Recapture Calculator

Every year you own a rental, you write off part of the building's value on your taxes. When you sell, the IRS taxes those write-offs back at up to 25% — even if you never realized you were taking them. Estimate that bill here.

Your Property

How the estimate works

Residential rentals are depreciated over 27.5 years, straight-line. The building's value (your purchase price minus the land's share) divided by 27.5 gives your annual write-off; multiply by years owned and you get total depreciation. If you enter a known total from your returns, the calculator uses that instead.

One detail that surprises people: recapture is based on depreciation that was allowed or allowable. If you never claimed depreciation you were entitled to, the IRS still taxes you as if you had. There's no upside to skipping the deduction.

Example A $400,000 rental with 20% land value has a $320,000 depreciable building. That's $11,636 per year. After 10 years you've written off $116,364 — and selling triggers up to $29,091 of recapture tax on top of capital gains.
Postpone recapture with a 1031 exchange →Recapture defers along with capital gains when you exchange instead of sell

Common Questions

What is depreciation recapture?

When you sell a rental for more than its depreciated value, the IRS taxes the depreciation you claimed over the years at a rate of up to 25%. It exists because those write-offs reduced your ordinary income while you owned the property.

I never claimed depreciation. Do I still owe recapture?

Usually yes. The tax applies to depreciation that was allowed or allowable, meaning the IRS assumes you took it whether you did or not. A tax professional can sometimes fix missed depreciation with a Form 3115 filing before you sell.

Does a 1031 exchange defer depreciation recapture too?

Yes, when you exchange real estate for real estate, recapture defers along with your capital gains. It comes due only if you eventually sell without exchanging or receive boot.

Keep Reading

Depreciation Recapture, ExplainedThe concept behind the calculator, in plain English.Cost Basis After an ExchangeWhat happens to your depreciation schedule in the new property.1031 Exchange CalculatorThe full picture: recapture, capital gains, and what you can postpone.