Capital Gains & Depreciation Recapture Calculator

Selling investment property triggers four separate taxes, not one. The largest is often the least expected: every dollar of depreciation you deducted over the hold comes back ahead of any capital gains rate, at your ordinary income rate up to a 25% ceiling, whether or not you ever claimed it. This works all four out, and the total is what a §1031 exchange defers.

Your numbers

Sale price

Selling costs

Commission, title, transfer tax.

What you paid for it

Capital improvements

Capitalised work over the hold. Raises your basis.

Depreciation taken

Allowed or allowable — recapture applies to depreciation you could have claimed even if you never did. Roughly the purchase price of the building, divided by 27.5 or 39, times the years you held it.

Your federal capital gains rate

Your ordinary income tax bracket

Sets the rate on your recaptured depreciation, which stops at 25%. Not the same as your capital gains bracket.

Your state income tax rate

Zero in nine states.

The 3.8% net investment income tax applies to me

It applies above $200,000 of modified adjusted gross income filing single, or $250,000 filing jointly.

The answer updates as you type. This puts your figures in the address bar so you can save or send them.

What the sale would cost you in tax

This is the amount a §1031 exchange defers. It is not forgiven — it comes due when you eventually sell without exchanging.

Total tax on the sale

$383,640

Depreciation recapture at 25%

Charged first, ahead of any capital gains rate. Your ordinary rate is above the 25% ceiling, so the ceiling applies.

$75,000

Federal capital gains tax

$196,000

Net investment income tax at 3.8%

$48,640

State income tax

$64,000

How the figure is built

Amount realised

Sale price less selling costs.

$1,880,000

Adjusted basis

What you paid, plus improvements, less the depreciation you took.

$600,000

Total gain

$1,280,000

Of which is recaptured depreciation

$300,000

Of which is capital gain

$980,000

Effective rate on the gain

29.97%

Proceeds after tax

Before paying off any mortgage.

$1,496,360

What this figure assumes

The property was held more than a year, so the gain is long-term.
Depreciation of the amount entered is recaptured at 25%, ahead of any capital gains rate — your 32% ordinary income rate, capped at the 25% ceiling on unrecaptured §1250 gain.
Federal long-term capital gains at 20%, which you selected.
Net investment income tax at 3.8% on the whole gain, including the recapture.
State income tax at 5% on the full gain, with no preferential rate.
No passive activity losses, installment treatment, alternative minimum tax or other income are taken into account.

Want the detail?

The full basis and gain workings line by line, all four taxes separated, the assumptions written out, and your figures as entered — the document to hand your CPA.

The real number depends on your bracket, your other income and your state. A CPA who works on exchanges can turn this estimate into your actual figure.

Your result above is complete and stays on the page whether or not you fill this in.

How much tax will I pay if I sell my investment property?

What the sale costs in tax, including the recapture most estimates leave out.