Know what you owe before closing the sale. Model recapture, capital gains, and extra taxes. Export clear summaries for advisors, filings, and planning better.
| Input | Example value | What it represents |
|---|---|---|
| Asset type | Real estate | Rental or investment property category |
| Original cost | 300,000 | Purchase price used as starting basis |
| Land value | 60,000 | Non-depreciable portion (estimate only) |
| Improvements | 20,000 | Capital upgrades added to basis |
| Accumulated depreciation | 80,000 | Total depreciation claimed/allowable |
| Sale price | 420,000 | Gross sale amount |
| Selling costs | 25,000 | Commissions and closing costs |
| Ordinary rate | 32% | Rate for recapture and short-term gains |
| Capital gains rate | 15% | Rate on remaining long-term gain |
| State rate | 0% | Optional additional tax estimate |
Example outcome (approx.):
Adjusted basis = (Original cost + Improvements) − Accumulated depreciation
Net sale proceeds = Sale price − Selling costs
Gain (or loss) = Net sale proceeds − Adjusted basis
Taxable gain = Gain × Business/Investment Use %
Recapture amount = min(Accumulated depreciation × Use %, Taxable gain), when gain is positive
Remaining gain = Taxable gain − Recapture amount
Recapture tax = Recapture amount × Recapture tax rate
Total estimated tax = Recapture tax + Gain tax + State tax + NIIT (if applied)
When depreciated property is sold for more than its adjusted basis, part of the gain can be reclassified as recapture. This calculator estimates the amount tied to prior depreciation and separates it from any remaining gain. It supports quick “what-if” checks using your expected sale price, selling costs, and tax rates, so you can anticipate cash needed at closing.
Adjusted basis starts with original cost and then adds capital improvements. Accumulated depreciation reduces basis because it reflects deductions already taken (or allowable). For real estate, land value is shown to help estimate depreciable basis and highlight why land is not depreciated. The gain calculation uses net proceeds, so commissions, legal fees, and closing costs can materially change results.
Taxable gain equals net sale proceeds minus adjusted basis, optionally scaled by the business or investment use percentage. Recapture is limited to the smaller of accumulated depreciation and taxable gain, and it becomes zero when the transaction produces no taxable gain. The remaining gain is then taxed at the long-term capital rate when the holding period qualifies, or at the ordinary rate for short-term sales.
For personal or business property, recapture is taxed at the ordinary income rate entered. For real estate, the tool applies a capped recapture rate and allows an optional override, then uses the remaining gain rate selected. Optional state tax is applied to total taxable gain in this estimator. A simplified NIIT toggle adds a surtax on taxable gain for scenario testing, which is useful when comparing marginal rate assumptions.
Review the breakdown to confirm the story: basis, proceeds, gain, recapture, and remaining gain. Use the effective tax rate to compare selling now versus later, adjusting selling costs, depreciation totals, or rates to stress-test outcomes. Export CSV for spreadsheets or PDF for sharing with an advisor, and keep inputs consistent across scenarios. If you have partial personal use, set the use percentage to the taxable portion and document your rationale. Run multiple cases to see how fees and depreciation shift your final liability.
Q1: What is depreciation recapture?
A: Depreciation recapture is the portion of sale gain attributed to prior depreciation deductions. It is typically taxed at ordinary rates for many assets, or at a capped rate for certain real estate gains, depending on rules and facts.
Q2: Do I owe recapture if I sell at a loss?
A: Usually no. This estimator limits recapture to taxable gain, so if net proceeds do not exceed adjusted basis, recapture is set to zero. Special situations can exist, so confirm with a tax professional.
Q3: Why does the calculator ask for land value?
A: Land is generally not depreciated. For real estate, separating land helps estimate the depreciable basis and flags inputs that may be inconsistent. The gain calculation still uses adjusted basis and net proceeds.
Q4: How does holding period affect the result?
A: If the sale is long-term, the remaining gain after recapture is taxed using the capital gains rate you enter. If short-term, the remaining gain is taxed at the ordinary income rate in this model.
Q5: What does Business/Investment Use % mean?
A: It scales the gain and depreciation to the taxable portion when an asset has mixed personal and taxable use. For example, 70% applies 70% of depreciation and gain to the tax computation, keeping the rest outside the estimate.
Q6: How is NIIT handled here?
A: NIIT is applied as a simplified surtax on taxable gain when enabled. Actual NIIT depends on income thresholds and net investment income rules, so use it for scenario planning and adjust the rate to match your assumptions.
Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.