Capital Gains Tax Calculator for Rental Property

Estimate the tax you'll owe when you sell a rental property. Enter your sale price, what you paid, improvements and depreciation to see your gain split into depreciation recapture and long-term capital gain at current IRS rates, plus net investment income tax and state tax.

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For selling a US residential rental building you bought, depreciated under the General Depreciation System (27.5 years, straight line). It doesn't cover cost segregation, bonus or accelerated depreciation, separately depreciated assets like appliances or land improvements, former homes, inherited, gifted or exchanged property, the home sale exclusion, installment sales, 1031 exchanges, partnership interests or prior section 1231 losses.

The sale
What the buyer pays.
Agent commission, title, transfer taxes and closing costs you pay as the seller.
Sets the holding period and which year's IRS brackets apply.
Only used to show the cash you walk away with.
What you put in
What you paid, land included.
Title insurance, legal, recording and transfer taxes. Not loan costs like points.
Work that added value or life, like a new roof or kitchen. Not repairs.
Sets the holding period.
When it was placed in service. Depreciation starts here, not when you bought it.
Everything you claimed, plus any you were entitled to but missed. Your Form 4562s show what you claimed. Our depreciation calculator works out the full amount.
The building share over 27.5 years from the month it was ready to rent. If you've entered improvements, enter your depreciation instead, because they're depreciated separately.
Land can't be depreciated. Don't know it? Pick From my tax bill and copy two numbers from your property tax bill.
From the assessment closest to when you bought, often labelled Land. Your county assessor's website usually shows past years.
Often labelled Improvements or Building. Use the same year's assessment, not a recent bill.
Your taxes
Your status on the return for the year you sell.
Wages, net rental profit and other income before deductions, not counting this sale. Enter 0 if none.
Leave blank to use the standard deduction.
A flat-rate estimate, not your state's actual calculation. Leave blank for states with no income tax.
Untick only if you've confirmed this sale isn't subject to it. Real estate professional status doesn't settle that on its own.
Estimate only. Federal tax is the difference between your tax with and without the sale, using the IRS brackets for the year of sale, or the latest year published. Tax with the sale follows the IRS Schedule D Tax Worksheet, assuming no qualified dividends, other capital gains or losses, or 28% rate gain. The part of the gain from depreciation allowed or allowable (unrecaptured section 1250 gain, never more than the gain) is taxed at ordinary rates up to 25%, and the rest of a long-term gain at 0%, 15% or 20%. A gain on property held a year or less is taxed as ordinary income. The basic standard deduction is used unless you enter a higher total. The net investment income tax is a simplified estimate that treats your other income plus the gain as your modified adjusted gross income. State tax is a flat rate you enter, not a calculation of your state liability. It ignores section 1231 netting and prior section 1231 losses, the home sale exclusion, capital losses from other sales, the alternative minimum tax and passive losses carried forward. Property placed in service and sold in the same tax year gets no depreciation. Future tax rules and thresholds may differ. Talk to a tax professional before you sell. Not tax advice.

How to calculate capital gains tax on a rental property

Your gain is what you get from the sale minus your adjusted basis. The part that comes from depreciation, never more than the gain itself, is taxed at up to 25%, and the rest at long-term capital gains rates.

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Capital gains tax formula for rental property: adjusted basis, gain and tax, with a worked example for a 2026 sale
Step 1

Work out your adjusted basis

Add the purchase price, buying costs and capital improvements. Then subtract the depreciation allowed or allowable: what you claimed, plus any you were entitled to but missed.

Step 2

Subtract it from your net sale price

Take selling costs off the sale price. Whatever is left above your adjusted basis is your gain.

Step 3

Split the gain and apply the rates

The depreciation part, never more than the gain itself, is taxed at your income tax rate, up to 25%. The rest is taxed at 0%, 15% or 20% depending on your income, with 3.8% NIIT on top for higher earners.

Worked example (2026 sale)

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For a 2026 sale: a married couple filing jointly sells a rental for $450,000 with $27,000 of selling costs. They bought it for $300,000 with $8,000 of closing costs, spent $25,000 on improvements and had $70,000 of depreciation allowed. Their other income is $152,200, which is $120,000 after the $32,200 standard deduction for 2026.

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Adjusted basis = $333,000 - $70,000 = $263,000

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Gain = $423,000 - $263,000 = $160,000

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Recapture = $70,000 × 22% = $15,400. It sits in their 22% bracket, below the 25% cap

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Capital gains = $90,000 × 15% = $13,500

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NIIT = 3.8% × $62,200, the amount by which their $312,200 of income plus gain passes the $250,000 threshold = $2,364

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That's $31,264 of federal tax, or 19.5% of the gain. A 5% state rate adds $8,000.

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What drives your tax bill when you sell

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Capital Gains Tax Calculator for Rental Property

Every dollar of depreciation lowers your basis, so it raises your gain when you sell. That part is taxed at your income tax rate, capped at 25%, even if you never claimed the deduction.

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Your income sets the rate on the rest

Long-term gains are stacked on top of your other income. Gains that land in the 0% band owe no regular federal income tax, so selling in a lower-income year, or splitting a sale across two years, can cost far less.

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Why should you use our capital gains tax calculator?

  • Uses the current IRS brackets for your filing status
  • Splits your gain into depreciation recapture and long-term capital gain
  • Adds the 3.8% net investment income tax and your state rate
  • Shows the cash you walk away with after paying off the mortgage
  • Free, fast and no sign-up

FAQs

How is capital gains tax calculated on a rental property?

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Subtract your adjusted basis from the sale price minus selling costs. Adjusted basis is what you paid, plus buying costs and improvements, minus the depreciation allowed or allowable. The part of the gain that comes from that depreciation, up to the total gain, is taxed at your income tax rate up to 25%, and the rest is generally taxed at long-term capital gains rates if you owned the property for more than a year, subject to section 1231 rules.

What is the capital gains tax rate on rental property?

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Long-term gains are taxed at 0%, 15% or 20%, depending on your taxable income and filing status. The depreciation part of the gain is taxed at up to 25%. Higher earners may also owe the 3.8% net investment income tax, and most states add their own income tax. A gain on property held a year or less is taxed as ordinary income.

Does the home sale exclusion apply to a rental property?

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Generally only if you owned the home and lived in it as your main home for at least two of the five years before the sale, and you haven't used the exclusion in the two years before. A partial exclusion can apply if you fall short because of a job move, health or other unforeseen circumstances. Since 2009, time it was a rental before you lived in it generally reduces the exclusion, but time after you moved out, within the five-year window, usually doesn't. Gain from depreciation allowed or allowable after May 6, 1997 can't be excluded.

Do I pay capital gains tax if I reinvest the money?

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Yes, unless you use a 1031 exchange. Buying another property with the proceeds doesn't defer tax by itself. In a typical delayed exchange, you identify a replacement within 45 days of the sale and receive it by the earlier of 180 days or your tax return due date, including extensions. Most sellers use a qualified intermediary so they never receive the cash. A qualifying exchange may defer the gain, depreciation recapture included, but cash or other non-like-kind property you receive can still be taxed.

Do I pay state capital gains tax on a rental property?

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Usually. Most states tax capital gains as regular income, while states with no income tax, such as Florida and Texas, don't tax them. If the property is in a different state from where you live, you generally owe tax to the state where the property is, and your home state may give you a credit for it. Our calculator applies the flat rate you enter as an estimate. It doesn't model state brackets, basis differences, exclusions or credits.