Recapture Depreciation Calculator

Recapture Depreciation Calculator calculator can be used to calculate the recapture depreciation for real estate or other property when it is sold for more than its adjusted basis. This helps determine the taxable amount that must be reported as ordinary income.

Input Parameters

Calculation Results

Calculation Formula

Recapture Depreciation = Selling Price - Adjusted Basis - Accumulated Depreciation

Where:
- Selling Price: The amount for which the property was sold
- Adjusted Basis: Original cost minus any depreciation taken
- Accumulated Depreciation: Total depreciation taken on the property

Recapture Depreciation Calculator Calculator Usage Guide

Learn how to use the Recapture Depreciation Calculator and its working principles

How to Use the Calculator

  1. Enter the Original Cost of the property (purchase price).
  2. Enter the Adjusted Basis of the property, which is the original cost minus any depreciation taken.
  3. Enter the Selling Price of the property when it was sold.
  4. Enter the Accumulated Depreciation that has been taken on the property.
  5. Click the Calculate button to compute the recapture depreciation and taxable income.
  6. If the calculated recapture depreciation is positive, it represents the amount of income that must be reported as ordinary income.

Understanding Recapture Depreciation

Recapture depreciation occurs when a property is sold for more than its adjusted basis. The portion of the gain that is equal to the depreciation taken is considered ordinary income and is taxed at ordinary income tax rates, rather than capital gains tax rates.

Example

Suppose you purchased a property for $500,000. You have taken $100,000 in depreciation over the years. If you sell the property for $600,000:

  • Original Cost: $500,000
  • Adjusted Basis: $500,000 - $100,000 = $400,000
  • Selling Price: $600,000
  • Accumulated Depreciation: $100,000
  • Recapture Depreciation: $600,000 - $400,000 - $100,000 = $100,000
  • Taxable Income: $100,000 (This amount would be taxed as ordinary income)

Important Notes

The recapture depreciation calculation provided here is a simplified version. For actual tax purposes, it's important to consult with a tax professional or refer to the IRS guidelines, as there may be additional factors to consider.