Section 1245 vs 1250 Recapture Calculator 2026
Calculate §1245 (personal property) and §1250 (real property) depreciation recapture on asset sales. Compare ordinary income recapture, unrecaptured §1250 gain at 25%, and remaining LTCG.
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Total depreciation deducted since acquisition $
§1250: usually same as accumulated (post-ACRS). §1245: same as accumulated. $
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$0
Total Tax
$0
Ordinary Income Recapture
$0
Unrecaptured §1250 (25%)
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Remaining LTCG
Recapture Calculation
| Component | Amount | Rate | Tax |
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§1245 vs §1250 Recapture: The Key Differences
§1245 (personal property): All prior depreciation is recaptured as ordinary income — no exceptions. The ordinary rate applies to the full accumulated depreciation amount, then any remaining gain above original cost is LTCG.
§1250 (real property): Only depreciation in EXCESS of straight-line is ordinary recapture (rarely applicable under current MACRS). The straight-line portion is "unrecaptured §1250 gain" taxed at a maximum 25% rate. Any appreciation above original cost is LTCG at 0%/15%/20%.
The Formula
Adjusted Basis = Original Cost − Accumulated Depreciation
Realized Gain = Sale Price − Selling Costs − Adjusted Basis
§1245: Ordinary Recapture = min(Realized Gain, Accumulated Depreciation)
§1250: Ordinary Recapture = min(Realized Gain, Excess Depreciation over SL)
§1250: Unrecaptured 1250 = min(Realized Gain − Ordinary, Straight-Line Depreciation) → 25%
LTCG = Realized Gain − Ordinary Recapture − Unrecaptured 1250 → 0/15/20%
Realized Gain = Sale Price − Selling Costs − Adjusted Basis
§1245: Ordinary Recapture = min(Realized Gain, Accumulated Depreciation)
§1250: Ordinary Recapture = min(Realized Gain, Excess Depreciation over SL)
§1250: Unrecaptured 1250 = min(Realized Gain − Ordinary, Straight-Line Depreciation) → 25%
LTCG = Realized Gain − Ordinary Recapture − Unrecaptured 1250 → 0/15/20%
Sources and References (click to expand)
- IRC §1245 — Gain from dispositions of certain depreciable property (personal property recapture)
- IRC §1250 — Gain from dispositions of certain depreciable realty (real property recapture)
- IRC §1(h)(1)(E) — Maximum 25% rate on unrecaptured §1250 gain
- IRS Publication 544 — Sales and Other Dispositions of Assets (recapture rules)
- Treasury Reg §1.1250-1 — Gain from disposition of §1250 property
Extended
Side-by-Side Comparison & Bulk Asset Calculator
Compare same property facts under §1245 vs §1250. Multi-asset bulk sale calculator with tax by asset type. Bar chart.
Compare the same property as §1245 vs §1250 assets, and model a bulk sale with multiple asset types.
| Property Type | Ordinary Recapture | Unrcp. §1250 (25%) | LTCG (0-20%) | Total Tax |
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Bulk Asset Sale Calculator
| Asset | Type | Sale Price | Orig. Cost | Deprec. | Ordinary Recapture | 25% Gain | LTCG |
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Frequently Asked Questions
What is the difference between §1245 and §1250 depreciation recapture?
Section 1245 applies to personal property (equipment, machinery, vehicles, computers) and requires that ALL prior depreciation be recaptured as ordinary income upon sale. Section 1250 applies to real property (buildings, structures) and uses a more favorable rule: only depreciation in EXCESS of straight-line is recaptured as ordinary income. Under current law (post-ACRS), most real property uses straight-line depreciation, so there is rarely any §1250 ordinary recapture. However, the "unrecaptured §1250 gain" — straight-line depreciation on real property — is taxed at a maximum 25% capital gains rate under IRC §1(h)(1)(E), which is still less than ordinary income rates.
What is "unrecaptured §1250 gain" and how is it taxed?
Unrecaptured §1250 gain is the portion of real property gain attributable to straight-line depreciation deductions previously taken. While it does not technically qualify as §1250 "recapture" (because it's the straight-line amount, not excess depreciation), Congress created a special 25% maximum long-term capital gains rate for this amount under IRC §1(h)(1)(E). This means if you sell a rental building with accumulated depreciation, that portion of the gain is taxed at a maximum of 25%, not the 0%/15%/20% LTCG rates that apply to the remaining appreciation.
What property qualifies under §1245 recapture?
Section 1245 property includes all depreciable personal property: machinery, equipment, vehicles, computers, office furniture, certain improvements (§179 expensing creates §1245 recapture), and some intangible assets (patents, licenses). It also includes certain real property placed in service before 1987. Key point: §1245 recapture is "all-or-nothing" — ALL prior depreciation is recaptured as ordinary income, with no favorable 25% rate. This makes §1245 recapture more tax-expensive than §1250 recapture for properties with significant depreciation.
How is depreciation recapture calculated in a bulk asset sale?
In a bulk sale (selling a business or property with multiple asset types), each asset must be classified as §1245 or §1250 property and its recapture calculated separately per IRC §1245(a) and §1250(a). The purchase price must be allocated among assets using Form 8594 (Asset Acquisition Statement) with a residual allocation method. Equipment, vehicles, and fixtures receive §1245 recapture. Buildings receive §1250/unrecaptured §1250 treatment. The aggregated result determines total ordinary income (recapture) vs long-term capital gain.
Does a 1031 exchange defer §1245 and §1250 recapture?
Yes, a properly executed 1031 exchange defers ALL gain — including §1245 recapture and unrecaptured §1250 gain — in the like-kind property. The deferred recapture is embedded in the new property's adjusted basis. However, if you receive "boot" (cash or unlike property), the boot is first allocated to recapture, then to capital gain. When you eventually sell the replacement property without exchanging, all the accumulated recapture (from both properties) will be recognized.