Enter Property Sale Details
Formula Used
- Amount Realized = Sale Price + Debt Relief + Other Consideration - Selling Expenses
- Gross Basis = Purchase Price + Purchase Costs + Capital Improvements + Other Basis Additions
- Adjusted Basis = Gross Basis - Accumulated Depreciation - Other Basis Reductions
- Recognized Gain = Realized Gain - Excluded or Deferred Gain
- Additional Depreciation = Accumulated Depreciation - Straight-Line Depreciation
- Section 1250 Recapture = Lesser of Recognized Gain or Additional Depreciation × Applicable Percentage
- Unrecaptured Section 1250 Gain = Lesser of Remaining Gain or Depreciation Not Recaptured as Ordinary Income
- Estimated Tax = Ordinary Recapture Tax + Unrecaptured Gain Tax + Capital Gain Tax + NIIT Estimate
This is a planning model. Complex sales may need adjustments for installment reporting, partnership allocations, passive losses, prior Section 1231 losses, like-kind exchange history, or tax return limitations.
How to Use This Calculator
- Enter the sale price and selling costs from your closing statement.
- Add debt relief only when the buyer assumes debt as separate consideration.
- Enter purchase price, capitalized costs, and improvement basis.
- Enter accumulated depreciation from your depreciation schedule.
- Enter the straight-line depreciation amount for comparison.
- Adjust tax rates for your planning scenario.
- Press the calculate button to show results above the form.
- Download CSV or PDF for your records.
Example Data Table
| Scenario | Sale Price | Adjusted Basis | Total Depreciation | Straight-Line Depreciation | Ordinary Recapture | Unrecaptured Gain |
|---|---|---|---|---|---|---|
| Post-1986 straight-line property | $750,000 | $428,000 | $120,000 | $120,000 | $0 | $120,000 |
| Accelerated depreciation excess | $750,000 | $428,000 | $120,000 | $100,000 | $20,000 | $100,000 |
| Low gain sale | $560,000 | $520,000 | $70,000 | $60,000 | $10,000 | $30,000 |
Understanding Section 1250 Recapture
Why the Rule Matters
Section 1250 rules matter when depreciable real property is sold for a gain. The calculator helps estimate the gain layers before a tax return is prepared. It separates adjusted basis, total recognized gain, ordinary recapture, unrecaptured gain, and remaining capital gain.
Basis and Sale Amounts
A sale begins with amount realized. This usually includes the selling price, debt relief, and other consideration. Selling costs reduce that amount. The adjusted basis starts with purchase cost, closing basis items, improvements, and other additions. Depreciation and other basis reductions lower it.
Additional Depreciation
The main recapture question is simple. Did depreciation exceed straight-line depreciation? That excess is additional depreciation. Section 1250 can treat part of the gain as ordinary income. This tool compares recognized gain with additional depreciation, then applies the selected applicable percentage.
Unrecaptured Gain
Many modern real estate assets use straight-line depreciation. In those cases, ordinary Section 1250 recapture may be zero. There still may be unrecaptured Section 1250 gain. That is the gain connected to depreciation that was not already treated as ordinary income. The calculator estimates that layer separately and applies the selected unrecaptured gain rate.
Planning Limits
The result should be read as a planning estimate. It does not replace Form 4797, Schedule D, or professional review. Real transactions can include installment sales, casualty adjustments, passive activity rules, partnership allocations, prior loss recapture, and like-kind exchange history.
Records to Review
Use careful records for every input. Closing statements support sale price and selling costs. Depreciation schedules support accumulated depreciation. Improvement records support added basis. If land and building amounts are separated, keep that support too.
Scenario Testing
The chart gives a fast visual check. A large gap between amount realized and adjusted basis creates taxable gain. A large depreciation amount can shift more gain into the special real estate layers. Export the results after testing each scenario.
Final Review
This calculator is useful before listing property, refinancing, restructuring ownership, or meeting an adviser. It helps you ask better questions. It also helps compare sale prices, selling costs, and depreciation histories. Keep final filing decisions with a qualified tax professional. Run conservative, base, and optimistic cases. Small changes in costs or depreciation can materially change recapture, cash needs, and after-tax proceeds during early planning reviews today.
FAQs
What is Section 1250 depreciation recapture?
It is a tax rule for gain from depreciable real property. It can convert certain depreciation-related gain into ordinary income when depreciation exceeded straight-line depreciation.
What is additional depreciation?
Additional depreciation is the excess of depreciation taken or allowed over the depreciation that would have been allowed under the straight-line method.
Why can ordinary Section 1250 recapture be zero?
Many modern real estate assets are depreciated using straight-line methods. If actual depreciation does not exceed straight-line depreciation, ordinary Section 1250 recapture may be zero.
What is unrecaptured Section 1250 gain?
It is depreciation-related long-term gain that was not treated as ordinary recapture. It is commonly modeled separately because it may use a special maximum rate.
Does this calculator prepare Form 4797?
No. It provides a planning estimate. Use tax software or a qualified adviser for final Form 4797, Schedule D, and return reporting.
Should I enter depreciation taken or allowable?
Use the amount from your depreciation schedule. Tax rules often consider depreciation allowed or allowable, so missing deductions may still affect gain calculations.
What if the property sale creates a loss?
The calculator shows realized loss when adjusted basis exceeds amount realized. Recapture layers generally need recognized gain, so gain-based tax amounts become zero.
Can this handle complex real estate transactions?
It handles common planning scenarios. It does not fully model partnerships, installment sales, exchanges, passive losses, prior Section 1231 losses, or state tax differences.