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Estimate federal tax on depreciation-related and other gains from a qualifying residential building sale in 2026.
Depreciation-related tax
$11,486Unrecaptured section 1250 gain; maximum 25%Capital gains tax
$15,000Federal tax allocated to the remaining long-term gainThese two amounts estimate the additional federal tax from this sale under the stated assumptions.
Adjusted basis: $200,000. Positive gain: $150,000, including $50,000 of depreciation-related gain.
Example: illustrative taxable income of $80,000.
Rates as of
The calculator estimates additional 2026 federal tax from a fully taxable residential rental building sale. It assumes the property was held for more than a year and the building used straight-line depreciation. The first output concerns unrecaptured section 1250 gain, commonly discussed as depreciation recapture. The second concerns the remaining long-term capital gain.
Use sale proceeds and basis allocated to the building. Enter the building sale price, the tax basis before depreciation and the depreciation allowed or allowable. A basis already reduced by depreciation would cause the reduction to be counted twice. The calculator subtracts depreciation once, finds positive gain and limits the depreciation-related portion to the smaller of that gain and depreciation.
Other income means taxable ordinary income before this sale, after applicable deductions. It is not gross salary. Filing status chooses the published 2026 federal thresholds. The form cannot determine a taxable-income figure from earnings alone, so establish that amount before entering it.
Our example uses a $350,000 building sale price, $250,000 basis before depreciation, $50,000 depreciation and $80,000 other taxable income for a single filer. Adjusted basis is $200,000, giving $150,000 of positive gain.
The $50,000 depreciation-related portion crosses the 22% and 24% ordinary bands: $25,700 at 22% plus $24,300 at 24% gives $11,486. The remaining $100,000 gain gives $15,000 at 15%.
For this limited residential case, twenty-five percent is the maximum rate on unrecaptured section 1250 gain. Lower ordinary rates can apply to part or all of it. The calculation follows the Schedule D tax worksheet's allocation between ordinary-rate amounts, the capped depreciation-related portion and the remaining preferential-rate gain. It also applies the worksheet's all-ordinary-tax ceiling.
The remaining gain can fall into the zero, fifteen or twenty percent capital-gain bands. Where a threshold is crossed, the relevant parts are taxed separately. The calculation therefore uses the income and filing-status inputs instead of multiplying all sale proceeds or all depreciation by one rate. The visible split allocates any saving from the all-ordinary ceiling to the remaining gain.
An actual return may use IRS tax tables, whole-dollar rounding and facts outside this model, so its filed amounts can differ.
This version uses the 2026 rate thresholds in Revenue Procedure 2025-32 and the currently published Schedule D worksheet mechanics. It does not calculate net investment income tax, state tax or local tax. There are also no inputs for selling expenses, qualified dividends, other capital gains and losses, suspended losses, credits or the section 1231 lookback. Those items may materially change a real return.
Only the building allocation is covered; land and other assets are excluded. Accelerated depreciation, separately depreciated equipment and cost-segregation assets can have different recapture treatment. A short holding period, installment sale, exchange, exclusion or non-resident situation also needs a different analysis. The calculator does not have eligibility fields for those cases and must not be treated as covering them.
If sale proceeds do not exceed adjusted basis, both tax outputs are zero. That means there is no positive taxable gain in this simplified comparison, not that a tax deduction or refund has been assessed.
Ask a tax professional to review the depreciation schedule, basis adjustments, proposed selling costs and the relevant tax year's other income. The ordinary income figure can change when deductions are limited or losses are released. Those interactions cannot be recovered from the five listed inputs.
Keep the output with the assumptions used to create it. Recalculate if the price, basis or income estimate changes, and confirm the current rules before completing a transaction or filing a return. The related depreciation schedule can explain a standard building deduction, but it does not replace historical records of amounts allowed or allowable.
Not in the supported straight-line residential case. Unrecaptured section 1250 gain is subject to a maximum 25% rate, and lower ordinary rates can apply.
Enter the building tax basis before subtracting depreciation, with land excluded. The calculator reduces it once; entering an already depreciated basis would overstate gain.
IRS rules can still require depreciation allowed or allowable to reduce basis. Have a tax professional check missed deductions before entering the amount.
No. Net investment income tax and state taxes need additional facts not collected here. The two results are limited federal sale-tax estimates.
No. The tool shows zero estimated gain tax when proceeds do not exceed adjusted basis. It does not decide whether a loss is deductible.
