Calculate your depreciation recapture tax liability and see how a 1031 exchange can defer this often-overlooked cost of selling
If you don't know your accumulated depreciation amount, use our Depreciation Calculator to estimate it based on your property type, purchase date, and holding period.
The Depreciation Calculator will help you determine how much depreciation you've taken over the years, which is required for accurate recapture tax calculations.
Details about the property you're selling
Expected sale price of the property
What you originally paid for the property
Accumulated depreciation from tax records
Details about the property you're purchasing
Total purchase price of replacement property
Additional cash invested beyond net proceeds
Configure federal and state tax rates
Fixed at 25% (Section 1250 recapture)
Choose your income bracket
Select your state for accurate tax calculation
Note: State tax rates are estimates and may vary based on income level and local taxes. Always consult with a tax professional for accurate calculations.
Fill in your relinquished property details, replacement property purchase price, and tax settings to calculate your depreciation recapture tax in a 1031 exchange.
When you sell investment property, the IRS "recaptures" the depreciation deductions you claimed, taxing them at a maximum rate of 25% federally (Section 1250 recapture). This is separate from capital gains tax and applies to the accumulated depreciation taken during your ownership.
A properly structured 1031 exchange can defer depreciation recapture taxes by rolling your adjusted basis into the replacement property. However, this requires that your replacement property has depreciable improvements (buildings, fixtures, etc.). Land alone cannot absorb depreciation.
"Boot" occurs when you don't reinvest all net proceeds from the sale. Trading down triggers immediate capital gains tax on the boot amount. To maximize tax deferral, purchase a replacement property equal to or greater than your sale price.
This calculator assumes your replacement property has sufficient depreciable basis to absorb the deferred depreciation. If you're exchanging into raw land or property with minimal improvements, use our Building-to-Land Exchange Calculator to see the specific recapture implications.
Depreciation recapture calculations can be complex, especially with improvements, bonus depreciation, or Section 179 deductions. Always consult with a qualified 1031 intermediary, CPA, or tax attorney before making exchange decisions.
Depreciation recapture is a key tax consideration. Continue your tax planning with:
Calculate your total tax liability including capital gains and depreciation recapture
Understand how boot affects your depreciation recapture tax liability
Calculate your adjusted cost basis after accounting for depreciation
Prepare informed questions about depreciation recapture for your tax advisor
Connect with a CPA from your local Exit Council who specializes in depreciation recapture and business exit tax strategy.