Repossession of Real Property Calculator
If you have repossessed real property, you can use this calculator to determine the gain or loss as well as its new basis.
How the repossession of real property calculator works
Real property has a special rule that caps the taxable gain on repossession. It is the lesser of the cash you received before repossession minus the gain already reported, or the total original gain minus the gain reported minus your repossession costs.
Worked example: with payments received before repossession of $60,000, gain already reported on those payments of $24,000 and total gain on the original sale of $150,000, the repossession of real property calculator shows taxable gain on repossession of $36,000.
- Cash received − gain reported
- $36,000
- Gain limit
- $121,000
- Taxable gain (lesser of)
- $36,000
- Repossession costs
- $5,000
The formula
Taxable gain = lesser of (payments received − gain reported) and (total gain − gain reported − repossession costs); the remainder carries into the new basis.
Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender, plan administrator or advisor.
Questions about the repossession of real property calculator
Why is real property treated differently?
A special IRS rule limits the gain you must recognise when you repossess real estate you sold on installment, so you are not taxed on more than you economically gained.
What happens to the gain that is not taxed now?
It is not erased — it reduces your basis in the repossessed property, so it is effectively taxed later if and when you sell that property.
Do repossession costs reduce my gain?
Yes — costs of repossessing the property lower the gain limit, and they are added to your basis in the repossessed real estate.
Is the Repossession of Real Property Calculator free to use?
Yes. Every calculator on FinCalculators is completely free, with no sign-up, login or paywall. You can run as many scenarios as you like.