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Depreciation Recapture Calculator (Sections 1245 and 1250)

What does this come to under the current IRS rules?

Splits the gain on a sale into ordinary recapture, unrecaptured section 1250 gain and remaining capital gain, with the tax at each rate.

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Your figures
Example figuresIllustrative only. Type over them with your own.
Tax on the gain
$12,000
Total tax on the sale gain
Total gain
$50,000
Ordinary recapture (1245)
$50,000
Drawn to one scale
Total gain$50,000
Ordinary recapture (1245)$50,000
Unrecaptured section 1250 gain$0
Remaining capital gain$0
Tax on the gain$12,000
All results
MeasureResult
Total gain$50,000
Ordinary recapture (1245)$50,000
Unrecaptured section 1250 gain$0
Remaining capital gain$0
Tax on the gain$12,000
How this was worked out
Work shownrecomputed as you type
Gain = price - adjusted basis
Recapture = lesser of gain and depreciation taken
1245: recapture at ordinary rate. 1250: recapture at the smaller of 25% and ordinary rate. Rest at the capital gains rate

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Gain = price - adjusted basis
  • Recapture = lesser of gain and depreciation taken
  • 1245: recapture at ordinary rate. 1250: recapture at the smaller of 25% and ordinary rate. Rest at the capital gains rate

How it works

Tax year: Any year (the 25 percent cap is a statutory rate).

Gain on a sale is price minus adjusted basis. For section 1245 property (equipment and other personal property), gain up to the depreciation taken is ordinary income. For section 1250 real property, gain up to the depreciation taken is unrecaptured section 1250 gain, taxed at a maximum 25 percent, and the rest is capital gain.

Enter your ordinary rate and capital gains rate. The tool taxes the unrecaptured piece at the smaller of 25 percent and your ordinary rate. It does not model the NIIT or state tax.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

What is unrecaptured section 1250 gain?

The gain on real property that is due to straight-line depreciation, taxed at a maximum 25 percent.

Can recapture exceed the gain?

No. Recapture is the lesser of the gain and the depreciation taken.

Is there recapture on a loss?

No. If the price is below adjusted basis there is no gain to recapture.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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