Building to Land Depreciation Recapture Calculator

Calculate depreciation recapture taxes when exchanging a depreciable commercial building for non-depreciable raw land in a 1031 exchange. Understand why land exchanges can trigger surprise tax bills even when you defer capital gains.

Need to calculate accumulated depreciation on your building first?

Use our Depreciation Calculator to determine how much depreciation you've taken based on your holding period, property type, and depreciation method. Then return here to see the recapture tax impact of exchanging into land.

Calculate My Depreciation

Building Being Sold

Details about the commercial building you're exchanging

$

Sale price must be greater than $0

$

Original purchase price required

$

Accumulated depreciation from tax records

Adjusted Basis (calculated)
$0
Original Price - Depreciation

Land Purchase Details

Details about the raw land you're purchasing

$

Total purchase price of land

$

Additional cash invested beyond net proceeds

Not buying raw land? If your replacement property includes a building or other depreciable improvements, use our general Depreciation Recapture Calculator instead to see how depreciable assets can help defer recapture taxes.

Tax Settings

Configure federal and state tax rates

%

Fixed at 25% (Section 1250 recapture)

Select your tax bracket rate

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Note: State tax rates are estimates and may vary based on income level and local taxes. Always consult with a tax professional for accurate calculations.

Enter Exchange Details

Fill in the property and tax information above to calculate your recapture tax liability.

Understanding Building-to-Land Exchange Taxes

Many investors are surprised to learn that depreciation recapture can be taxed even in a 1031 exchange. This happens when you exchange a depreciable property (like a commercial building) for a non-depreciable property (like raw land).

The Trap:
  • You complete a 1031 exchange (capital gains deferred ✓)
  • BUT depreciation recapture is STILL TAXED ⚠
  • This happens because land cannot be depreciated
  • Your accumulated depreciation has nowhere to "transfer"
Example:
  • • Building sold: $1,000,000
  • • Original purchase: $700,000 (10 years ago)
  • • Depreciation taken: $200,000
  • • Land purchased: $1,100,000 (0% depreciable)
  • • Capital gains deferred: $300,000 ✓
  • • Depreciation recaptured: $200,000 @ 25% = $50,000 tax ⚠

Key Point: Even though you're reinvesting MORE money ($1.1M vs $1M), you still owe $50,000 in recapture taxes because the replacement property lacks depreciable basis.