Your Rental
Don't know your depreciation taken? Use the auto-estimate below.
Recapture Tax
Enter purchase price and years held.
What is depreciation recapture?
Every year you own a rental property, the IRS lets you deduct a portion of its building cost as depreciation — a paper expense that reduces your taxable income. Residential rentals depreciate over 27.5 years, commercial over 39.
When you sell, the IRS claws back those deductions. This is called Section 1250 depreciation recapture, and it's taxed at a flat 25% — higher than long-term capital gains for most investors.
A property you bought for $500k and depreciated for 15 years has ~$200k in recapture exposure. That's $50k in tax, before you even calculate capital gains.
How to defer depreciation recapture
A 1031 exchange defers depreciation recapture along with capital gains. Your basis and accumulated depreciation carry over into the replacement property. Keep exchanging until you die, and your heirs receive a stepped-up basis — the recapture is erased entirely.
The three rules most investors miss
1. You can't deduct depreciation you didn't take. The IRS assumes you took the maximum allowed, even if you didn't. Check your past returns.
2. Land doesn't depreciate. Only the building portion. That's why the land value input matters — put 0 and you'll overestimate your tax.
3. Cost segregation accelerates recapture too. If you used a cost seg study to front-load depreciation, the recapture calculation for 5- and 15-year assets differs from straight 1250. Complex — ask a CPA.