A Capital Gains Tax Calculator on Sale of Property helps you estimate how much tax you’ll owe when selling a home, rental property, or investment real estate.
Capital Gains Tax Calculator on Sale of Property
Uses automatic federal tax brackets for short-term and long-term capital gains, including progressive rate stacking.
Whether you’re a homeowner ready to cash out, a real estate investor planning a sale, or someone curious about how much profit you’ll keep after taxes, understanding capital gains tax is essential. Real estate taxes are more complex than taxes on stocks because they involve multiple layers—federal brackets, exclusions, depreciation recapture, NIIT (3.8%), and state rules.
This guide breaks down everything you need to know and shows you exactly how our calculator determines your capital gains tax. You’ll also find examples, strategies to reduce your tax bill, and answers to the most common questions sellers ask.
What Is Capital Gains Tax on the Sale of Property
When you sell a property for more than your adjusted cost basis, the IRS considers the profit a capital gain. Capital gains tax is assessed on that profit. Depending on how long you’ve held the property and whether it was a home or investment, taxes can vary widely.
Two Types of Capital Gains:
Short-Term Capital Gains (STCG):
- Property held less than 1 year
- Taxed at ordinary income rates (10%–37%)
- Usually more expensive
Long-Term Capital Gains (LTCG):
- Property held 1+ years
- Taxed at 0%, 15%, or 20%, depending on income
- Usually far lower than short-term rates
Real estate gets even more complicated because rental properties involve depreciation recapture, and high-income earners also face the Net Investment Income Tax (NIIT).
How the Capital Gains Tax Calculator on Sale of Property Works
Our Capital Gains Tax Calculator on Sale of Property uses all relevant IRS rules to provide the most accurate estimate possible. It considers:
- Purchase price
- Selling price
- Selling expenses
- Capital improvements
- Years held
- Filing status
- Taxable income
- State tax
- Depreciation claimed (for rentals)
- 3.8% Net Investment Income Tax
- Home sale exclusion ($250k / $500k)
Here’s how each input affects your taxable gain.
1. Cost Basis
Cost basis is what you originally invested in the property.
Formula:
Cost Basis = Purchase Price + Purchase Closing Costs + Improvements
2. Adjusted Basis
If the property was a rental, depreciation must be subtracted.
Formula:
Adjusted Basis = Cost Basis – Depreciation
The IRS requires depreciation recapture at sale even if you never claimed it.
3. Net Sale Proceeds
Formula:
Net Proceeds = Sale Price – Selling Costs
Selling costs include:
- Realtor commissions
- Title fees
- Transfer tax
- Staging
- Legal fees
Reducing taxable gain.
4. Capital Gain
Formula:
Capital Gain = Net Proceeds – Adjusted Basis
If the result is negative, there is no tax owed.
5. Home Sale Exclusion (Primary Residence Only)
You may exclude $250,000 (single) or $500,000 (married) of gain if:
- You owned the home 2 of the last 5 years
- You lived in it 2 of the last 5 years
- You have not used the exclusion in the past 2 years
If applicable:
Taxable Gain = Capital Gain – Exclusion
6. Short-Term vs. Long-Term Rate
- Less than 1 year? Taxed at your ordinary income tax rate
- More than 1 year? Taxed at long-term capital gains brackets:
7. Depreciation Recapture (Rental or Investment Property)
If you claimed depreciation on a rental property, the IRS taxes part of your gain at 25%—even if you qualify for long-term rates.
Formula:
Recapture Tax = Depreciation Taken × 25%
Our calculator automatically subtracts recapture before applying long-term capital gains brackets.
8. Net Investment Income Tax (NIIT, 3.8%)
This extra tax applies if your MAGI exceeds:
- $200,000 (single)
- $250,000 (married filing jointly)
Formula:
NIIT = 3.8% × Lesser of (Net Investment Income) or (MAGI – Threshold)
9. State Taxes
States vary dramatically:
- California: taxed as ordinary income
- Colorado: flat 4.4%
- Texas/Florida: 0%
- New York: progressive up to 10.9%
Our calculator supports:
- No state tax
- Ordinary income rate
- Custom rate input
Step-by-Step Example: How This Calculator Computes Capital Gains Tax
Let’s walk through a realistic scenario.
Example 1: Primary Residence Sale
- Purchase price: $300,000
- Improvements: $50,000
- Purchase costs: $10,000
- Sale price: $700,000
- Selling costs: $40,000
- Filing status: Married
- Income: $150,000
- Lived in home: Yes
- Depreciation: $0
- Years owned: 5
Step 1: Cost basis
Cost Basis = 300,000 + 10,000 + 50,000 = 360,000
Step 2: Net proceeds
Net Proceeds = 700,000 – 40,000 = 660,000
Step 3: Capital gain
Capital Gain = 660,000 – 360,000 = 300,000
Step 4: Subtract home sale exclusion
Taxable Gain = 300,000 – 500,000 = 0
Result: No tax owed.
Example 2: Rental Property With Depreciation Recapture
- Purchased: $300,000
- Depreciation claimed: $90,000
- Adjusted basis:
Adjusted Basis = 300,000 – 90,000 = 210,000
- Sale price: $550,000
- Selling costs: $30,000
- Net proceeds:
Net Proceeds = 550,000 – 30,000 = 520,000
- Capital gain:
Capital Gain = 520,000 – 210,000 = 310,000
- Filing status: Single
- Income: $120,000
- Not a primary residence
Step 1: Depreciation recapture
Recapture Base = 90,000
Recapture Tax = 90,000 × 0.25 = 22,500
Step 2: Remaining LTCG
LTCG Base = 310,000 – 90,000 = 220,000
Step 3: Apply LTCG brackets
Portions taxed at 0%, 15%, and possibly 20%.
Our calculator handles the math using the IRS stacking rules.
Step 4: Apply NIIT if income + gain > $200,000
This seller will owe some NIIT.
Step 5: Add state tax
Result:
Total taxes: ~$60,000+ depending on brackets and NIIT.
How the IRS Calculates Capital Gains Tax (Full Explanation)
This is how the IRS actually determines your tax.
1. Determine your adjusted cost basis
Includes improvements and purchase costs.
2. Subtract from net sale proceeds to get your gain
3. Determine short-term or long-term
4. Apply home sale exclusion (if eligible)
5. Calculate depreciation recapture (investment property)
Taxed at 25%
6. Apply LTCG progressive brackets
7. Apply NIIT (3.8%)
8. Add state tax
This calculator follows all the above steps automatically.
When You Can Exclude Up to $250,000 or $500,000 in Gain
This is the biggest tax break available to homeowners.
You qualify if:
- You owned the home 2 of the last 5 years
- You lived in it 2 of the last 5 years
- You haven’t used the exclusion in the past 2 years
Exclusion amounts:
- Single: $250,000
- Married filing jointly: $500,000
If your gain is under the limit, you pay no federal capital gains tax.
If your gain is above the limit, you pay tax only on the amount above it.
Example:
Gain = $700,000
Exclusion = $500,000
Taxable gain = $200,000
Capital Gains Tax for Rental or Investment Property
Rental and investment properties follow different rules:
1. No home sale exclusion
You cannot exclude $250k/$500k.
2. Depreciation must be recaptured
Even if you didn’t claim it.
3. Part of your gain is taxed at a flat 25%
This can be substantial.
4. Remaining gain receives LTCG treatment
0%, 15%, or 20%
5. NIIT usually applies
Many landlords cross the $200k / $250k MAGI threshold.
Common Mistakes When Estimating Capital Gains Tax
Most people underestimate taxes because they forget:
- Depreciation recapture
- Selling costs
- Improvements
- State tax
- NIIT (3.8%)
- Long-term VS short-term differences
- Incorrect filing status
- Thinking all gains fall into one bracket
- Forgetting that federal LTCG is progressive
Our calculator prevents these mistakes.
Strategies to Reduce Capital Gains Tax
These strategies can significantly reduce your tax bill:
1. Live in the home 2 of the last 5 years
Unlocks the $250k / $500k exclusion.
2. Track all capital improvements
Every dollar increases your basis.
3. Include all selling expenses
Commissions, closing fees, staging, repairs.
4. Use a 1031 exchange (investment properties)
Defer taxes indefinitely.
5. Offset gains with losses
Sell losing stocks the same year.
6. Use installment sales
Spread gain over multiple years.
7. Invest in Opportunity Zones
Advanced, but extremely powerful.
Try the Capital Gains Tax Calculator on Sale of Property
The Capital Gains Tax Calculator on Sale of Property is one of the most accurate online tools available because it includes:
- Progressive LTCG bracket stacking
- Depreciation recapture
- NIIT (3.8%)
- State tax options
- Home sale exclusion
- Effective tax rate calculation
Use it to estimate your taxes before selling and avoid surprise tax bills.
Conclusion
Selling property can trigger multiple layers of tax, and estimating your capital gains tax manually is complicated. With depreciation recapture, NIIT, state taxes, and IRS progressive brackets, even experienced investors often miscalculate their tax liability. A Capital Gains Tax Calculator on Sale of Property makes the process simple, accurate, and stress-free.
Whether you’re selling your first home, cashing out a rental, or exploring investment strategies, understanding your true tax impact is essential. Use the calculator above to see your numbers instantly—and always consult a tax professional for personalized guidance.