Capital gains tax calculator real estate
Capital gains tax calculator real estate: enter what the property cost, what you spent improving it, what you claimed in depreciation and what the sale netted. The calculator below works out the federal tax on the gain, including the slice that depreciation recapture moves onto a rate of its own.
Two levers move the number on investment property. The holding period decides whether the gain rides the 0/15/20 schedule or the ordinary brackets. The depreciation you claimed on a rental comes back on sale as unrecaptured section 1250 gain, which the law caps at 25%: a ceiling, not a flat rate. Selling your own home is a different case again, and this page covers that switch too.
How it works
How a property sale is taxed
The gain is net proceeds, the sale price less selling costs, minus the cost basis: what you paid plus capital improvements. Hold the property more than one year and the gain is long-term. At one year or less it is short-term, taxed in the ordinary brackets at up to 37%.
A rental carries a second layer. Each year you depreciated the building, and on sale the slice of the long-term gain equal to that straight-line depreciation is unrecaptured section 1250 gain. The calculator takes it in the row's own field, capped at the row's long-term gain. The Schedule D worksheet then runs that slice up through your ordinary brackets and charges the flat 25% only on whatever sits above the top of the 24 percent bracket, so lower incomes pay less than 25.
The row carries a main-home switch for the other case: a principal residence sold with the section 121 exclusion, which takes up to $250,000 of gain off, $500,000 joint, before anything is taxed. And on any row you can select a state to add its income tax on the gain.
Worked example
A rental sold after ten years: $40,929.25 on a $181,000 gain
You buy a rental in May 2016 for $310,000 and spend $35,000 on capital improvements, a basis of $345,000. You claim $90,000 of straight-line depreciation over the years. In June 2026 you sell for $560,000 and pay $34,000 in selling costs. Net proceeds are $526,000, so the long-term gain is $181,000. Wages are $160,000, filing single.
The row's section 1250 field carries the $90,000 of depreciation, splitting the gain in two. That slice rides the ordinary brackets first: wages leave taxable income at $143,900, and the recapture fills the 24 percent band up to its $201,775 top, so $57,875 pays 24 percent, $13,890. The remaining $32,125 pays the flat 25%, $8,031.25. Recapture total: $21,921.25 on $90,000.
The other $91,000 is ordinary long-term gain on the 2026 schedule, all of it above the $49,450 breakpoint and below the $545,500 breakpoint, so it pays 15%: $13,650. Income tax on the gain comes to $35,571.25. Modified adjusted gross income reaches $341,000, so the 3.8% net investment income tax applies to $141,000: $5,358. Federal total $40,929.25, an effective 22.6% on the gain.
One rental sale, 2026, single filer
| Step | Amount |
|---|---|
| Sale price | $560,000 |
| Selling costs | $34,000 |
| Cost basis, purchase plus improvements | $345,000 |
| Long-term gain on the sale | $181,000 |
| Section 1250 slice: $57,875 at 24% and $32,125 at 25% | $21,921.25 |
| Remaining gain at 15% | $13,650.00 |
| Income tax on the gain | $35,571.25 |
| Net investment income tax at 3.8% | $5,358 |
| Federal tax on the gain | $40,929.25 |
What moves the number
Details that change a property bill
- Improvements raise the basis and cut the gain. Capital work counts; repairs that were deducted in the year you paid them do not get counted twice.
- Selling costs come straight off. Commission and closing costs on the way out reduce proceeds, exactly as buying costs went into the basis.
- The depreciation you claimed sets the section 1250 slice, capped at the row's long-term gain. Skip the field and the whole gain takes the 0/15/20 schedule, which understates the bill on a rental.
- A sale held one year or less never reaches the special rate. Short-term gain is ordinary income; the 25% cap is a long-term matter.
- The main-home switch changes the case. Flipped on, the section 121 exclusion takes its $250,000, or $500,000 joint, off the gain before the schedule runs.
- State tax rides on top. Pick a state in the calculator and its income tax on the gain joins the federal figures.
Questions
Frequently asked questions
What is depreciation recapture on a rental?
The slice of your long-term gain equal to the straight-line depreciation you claimed. It is unrecaptured section 1250 gain, taxed at up to 25%: the worksheet runs it through your ordinary brackets first and only charges 25 percent on the part above the top of the 24 percent bracket.
Is the 25 percent recapture rate flat?
No, it is a ceiling. In the worked example only $32,125 of the $90,000 slice paid 25%; the other $57,875 paid 24 percent, because it filled the ordinary band below the cap.
How long must I hold investment property for the long-term rate?
More than one year. A sale on the first anniversary of the purchase is short-term, and short-term gain never reaches the 0/15/20 schedule or the special rates.
Does this page cover the home I live in?
The calculator's real estate row carries a main-home switch. With it on, the section 121 exclusion removes up to $250,000 of gain, $500,000 on a joint return, and only the remainder is taxed. The exclusion and the depreciation field are different cases: a rental you depreciated is not the home you live in.
Do selling costs reduce the taxable gain?
Yes. Commission and closing costs come off the proceeds before the gain is measured, and buying costs plus capital improvements went into the basis already.
Does the calculator add state tax on a property gain?
Yes, when you select a state. Most states tax a capital gain as ordinary income on their own brackets, and the state layer is shown next to the federal figures.
Sources
Where these figures come from
Also on capitalgainstax.net