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Cash from a sale, a refinance, or a hold

The worked example leaves $178,160 after a sale and $66,000 of refinance cash. Hold cash flow of $8,000 a year takes 22.27 years to match that sale net.

Sale

Sale price ($)

Selling costs ($)

Dollars win when this field is filled. Otherwise the percent is used.

Selling costs (%)

Mortgage balance ($)

Original basis ($)

Improvements ($)

Building depreciation taken ($)

Publication 527: depreciation reduces basis for a later sale.

Short-life depreciation taken ($)

Percents

Recapture percent

Starts at 25. IRS FAQ reviewed 2026-09-23: unrecaptured section 1250 gain may be taxed at 25%.

Ordinary percent on short-life depreciation

Used only when short-life depreciation is inside the gain. No single ordinary rate is filled in.

Long-term gain percent

Your rate on gain above depreciation. No bracket is filled in.

NIIT percent

Starts at 3.8. Same IRS FAQ: taxable gain may be subject to the 3.8% net investment income tax. Type 0 to drop the line.

Refinance

New loan ($)

Refinance costs ($)

New interest percent

New term (years)

Current annual debt service ($)

Optional. Used only to show the change in annual debt.

Hold

Annual cash flow ($)

Years to add up

A comparison window you choose. It is not a statutory holding period.

How it works

Adjusted basis is original basis plus improvements minus building depreciation and short-life depreciation.
Amount realized is sale price minus selling costs. Gain is amount realized minus adjusted basis.
Building depreciation inside the gain is multiplied by the recapture percent. Short-life depreciation inside the remaining gain is multiplied by the ordinary percent. Gain above both uses the long-term gain percent. Positive gain is multiplied by the NIIT percent.
Sale net is amount realized minus the mortgage balance minus those tax lines.
Refinance cash is the new loan minus the balance minus refinance costs. The payment is the fully amortizing monthly payment at the interest percent and term you enter. Interest over the term is that payment times the number of months, minus the new loan.
Hold total is annual cash flow times the years you enter. Years to match the sale is sale net divided by annual cash flow when that cash flow is positive.

Source: IRS Publication 527 (2025) for basis reduced by depreciation, and the IRS FAQ on unrecaptured section 1250 gain reviewed 2026-09-23 for the 25% and 3.8% starting percents, https://www.irs.gov/publications/p527.

Worked example

Sale price $500,000. Selling costs $30,000. Balance $250,000. Original basis $350,000. Improvements $20,000. Building depreciation $80,000. Short-life depreciation $0. Recapture percent 25. Long-term gain percent 15. NIIT percent 3.8.

Adjusted basis is $290,000. Amount realized is $470,000. Gain is $180,000. The recapture slice is $80,000, times 25%, which is $20,000. Remaining gain is $100,000, times 15%, which is $15,000. NIIT is $180,000 times 3.8%, which is $6,840. Tax is $41,840. Sale net is $178,160.

New loan $320,000, costs $4,000, rate 7%, term 30 years. Refinance cash is $66,000. Monthly payment is $2,128.97. Interest over the term is $446,429.20. Current annual debt of $18,000 rises by $7,547.64 a year. Hold cash flow of $8,000 for 5 years is $40,000, and $178,160 divided by $8,000 is 22.27 years.

Frequently asked questions

How is the sale gain split?

Adjusted basis is original basis plus improvements minus depreciation taken. Gain is sale price minus selling costs minus that basis. Building depreciation, up to the gain, is multiplied by the recapture percent. Short-life depreciation, up to the gain that remains, is multiplied by the ordinary percent. The rest of the gain uses the long-term gain percent. The NIIT percent multiplies the positive gain.

Why can I edit the recapture percent?

The field starts at 25 because the IRS FAQ reviewed September 23, 2026 says gain attributable to depreciation may be subject to the 25% unrecaptured section 1250 gain tax rate. The worksheet multiplies whatever percent is in the field.

Does refinancing use the recapture percent?

Refinance cash is the new loan minus the current balance minus refinance costs. The recapture percent is applied on the sale side. Loan proceeds are not multiplied by that percent here.

What does the hold line compare?

Hold cash is the annual cash flow you type, times the number of years you type. When that annual cash flow is positive and the sale tax lines are filled in, the page also divides sale net by annual cash flow.