Calculator
Formula Used
Building basis = original cost - land value + capital improvements.
Adjusted basis = building basis - depreciation allowed or allowable.
Building amount realized = sale price - land sale value - selling expenses.
Total gain = building amount realized - adjusted basis.
Excess depreciation = total depreciation - straight line depreciation.
Sec 1250 recapture = lesser of positive gain or excess depreciation.
Unrecaptured 1250 gain = remaining gain limited by remaining depreciation.
Example Data Table
| Input | Example Value | Purpose |
|---|---|---|
| Original property cost | $500,000 | Starting property cost |
| Land value | $100,000 | Removes nondepreciable land |
| Improvements | $50,000 | Adds capital work |
| Total depreciation | $120,000 | Reduces basis |
| Straight line depreciation | $110,000 | Tests excess depreciation |
| Sale price | $700,000 | Measures realized amount |
How to Use This Calculator
Start with the full property purchase cost. Enter the land value separately because land is not depreciated. Add improvements that were capitalized during ownership. Then enter the gross sale price. If part of the sale belongs to land, place that amount in the land sale box.
Next, add selling expenses. These may include broker fees, legal fees, and transfer costs. Enter total depreciation allowed or allowable. This number matters even when depreciation was not actually claimed. Add straight line depreciation for comparison. The tool uses both depreciation fields to estimate excess depreciation.
Enter tax rates for planning. These rates are only estimates. The calculator then shows adjusted basis, amount realized, total gain, possible Sec 1250 recapture, unrecaptured gain, and remaining long term capital gain.
Article: Understanding Sec 1250 Recapture
What This Calculator Does
This calculator helps estimate the gain categories created when depreciable real property is sold. It focuses on building basis, depreciation, sale proceeds, and possible recapture. The goal is to give a clear planning report before a final tax review.
Why Basis Matters
Basis is the starting point. A building usually begins with original cost minus land value. Land is not depreciated. Capital improvements increase the building basis. Depreciation then reduces the basis. A lower adjusted basis can create more taxable gain when the property is sold.
What Sec 1250 Recapture Means
Sec 1250 recapture can apply when real property has depreciation beyond straight line depreciation. The calculator compares total depreciation with straight line depreciation. The excess is tested against positive gain. The lower amount becomes the estimated recapture amount.
Unrecaptured 1250 Gain
Many real estate sales do not create large excess depreciation today. However, depreciation can still create unrecaptured 1250 gain. This is different from ordinary recapture. It is a special gain bucket linked to depreciation. The calculator separates it from remaining capital gain.
Sale Expenses and Allocation
Selling expenses reduce the amount realized. Land allocation also matters. If the sale includes land and building together, the calculator removes the land sale value from building proceeds. This keeps the building gain estimate cleaner.
Planning Use
Use this tool before meeting a tax adviser. Save the CSV file for worksheets. Save the PDF for records. Compare different sale prices, expense levels, and depreciation figures. This helps you understand how small input changes can affect taxable gain.
Important Reminder
This calculator is for general education. It does not replace professional tax advice. Real sales may involve passive activity rules, installment reporting, like-kind exchange rules, state taxes, prior losses, and entity-level issues.
FAQs
What is Sec 1250 recapture?
It is a rule that can convert part of real property gain into ordinary income when depreciation exceeded straight line depreciation.
Is land included in depreciation?
No. Land is not depreciated. This calculator separates land value from building basis and building sale proceeds.
What is adjusted basis?
Adjusted basis is building basis reduced by depreciation. It is used to measure gain or loss on the building sale.
What is excess depreciation?
Excess depreciation is total depreciation above straight line depreciation. It is the main amount tested for Sec 1250 recapture.
What is unrecaptured 1250 gain?
It is gain linked to prior depreciation that remains after any recapture calculation. It is separate from regular capital gain.
Can this calculator handle losses?
Yes. If adjusted basis is higher than amount realized, the result shows a loss instead of positive gain categories.
Should I use allowed or allowable depreciation?
Tax rules often consider depreciation allowed or allowable. Use the amount that applies to your records and tax position.
Is the PDF report a tax filing form?
No. The PDF is only a planning report. Use official forms and professional advice for actual filing.