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Real Estate Capital Gains Tax Calculator

Estimate the tax due when you sell a rental or investment property — including depreciation recapture, federal capital gains tax, the net investment income tax and state tax — and your after-tax proceeds.

Purchase Details
Sale Details
Your Tax Situation
Total Tax Bill
—
Federal + state + NIIT
Net After-Tax Proceeds
—
After all taxes & costs
Effective Tax Rate
—
Of total gain
Total Gain
—
Net proceeds – adj. basis
Gain Calculation
Original Purchase Price—
+ Closing Costs—
+ Capital Improvements—
− Depreciation Taken—
= Adjusted Basis—
Sale Price—
− Selling Costs—
= Net Sale Proceeds—
TOTAL GAIN—
Tax Breakdown
Depreciation Recapture—
Recapture Tax (25%)—
Long-Term Capital Gain—
LT Cap Gains Tax (—)—
NIIT (3.8%)—
State Tax (5%)—
TOTAL TAX—
Net After-Tax Proceeds—

How the gain on a rental property is calculated

Your gain is the sale price minus selling costs minus your adjusted basis. Adjusted basis starts with the purchase price plus closing costs and capital improvements, then is reduced by the depreciation you took. That reduction is why a rental’s taxable gain is often larger than its price appreciation.

If you held the property for more than one year, the gain is long-term and taxed at 0%, 15% or 20% depending on your income. Held one year or less, it is short-term and taxed at ordinary income rates.

Depreciation recapture, NIIT and state tax

The portion of the gain equal to depreciation taken is unrecaptured Section 1250 gain, taxed at a maximum federal rate of 25%. The remainder is taxed at the regular long-term capital gains rates.

Higher-income sellers may also owe the 3.8% net investment income tax on the gain if modified AGI exceeds $200,000 (single) or $250,000 (married filing jointly). Most states tax capital gains as ordinary income as well.

The primary-residence exclusion (up to $250,000 or $500,000 of gain) generally does not apply to rental property. To defer tax on a sale, consider a 1031 exchange.

Frequently asked questions

What is depreciation recapture?

When you sell a rental, the gain attributable to depreciation you took is taxed at up to 25% federally, rather than at the lower long-term capital gains rates.

What are the long-term capital gains rates?

0%, 15% or 20% at the federal level, depending on taxable income and filing status, for assets held more than one year. Short-term gains are taxed as ordinary income.

How can I reduce capital gains tax on a rental?

Common strategies include holding for more than a year, deducting all selling costs and improvements from basis, deferring with a 1031 exchange, or timing a sale for a lower-income year. Consult a tax professional.

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For informational purposes only. Tax rules change and depend on your situation — consult a tax professional or financial advisor before making investment decisions.