Estimate your capital gain, depreciation recapture, and total tax when selling a rental property.
Enter your rental property sale information
to estimate your capital gain and tax.
A capital gains on sale of rental property calculator is a free online tool that helps rental property owners estimate the potential capital gain and tax when selling a rental property. By entering your sale price, purchase price, improvements, depreciation, and other key information, you can get a quick estimate of your gain and potential tax.
Understanding your capital gains on sale of rental property is important for financial planning. This calculator also estimates depreciation recapture, which can significantly affect your tax liability.
Using this rental property capital gains calculator is straightforward. Follow these steps:
The basic formula for calculating gain on rental property is:
Adjusted Basis = Purchase Price + Improvements + Other Adjustments − Depreciation
Amount Realized = Sale Price − Selling Expenses
Total Gain = Amount Realized − Adjusted Basis
Depreciation-Related Amount = User-entered depreciation
Other Gain = Total Gain − Depreciation-Related Amount
Capital Gains Tax = Other Gain × Capital Gains Rate
Depreciation Tax = Depreciation Amount × Depreciation Rate
Total Tax = Capital Gains Tax + Depreciation Tax
Rental property sales can be more complex than primary residence sales due to depreciation considerations.
Depreciation is a tax deduction that allows rental property owners to recover the cost of the property over time. When you sell:
Even if you didn't claim depreciation, the IRS may require recapture of allowable depreciation. See IRS Publication 544 for details.
Your adjusted basis is what you've invested in the rental property:
A higher basis means a lower taxable gain. For more details, see IRS Publication 551.
Yes. Qualifying capital improvements increase your adjusted basis, which reduces your taxable gain. Examples include:
Routine repairs and maintenance do not generally increase basis.
Yes. Selling expenses reduce the amount you realize from the sale, which reduces your capital gain. Common selling expenses include:
Rental property can involve different tax treatment:
Hypothetical Scenario:
| Sale Price | $500,000 |
| Selling Expenses | $25,000 |
| Amount Realized | $475,000 |
| Purchase Price | $280,000 |
| Capital Improvements | $40,000 |
| Depreciation | $60,000 |
| Adjusted Basis | $260,000 |
| Estimated Total Gain | $215,000 |
| Depreciation Amount | $60,000 |
| Depreciation Tax (25%) | $60,000 × 25% = $15,000 tax |
| Other Gain (15%) | $155,000 × 15% = $23,250 tax |
| Total Estimated Tax | $38,250 |
This example is illustrative only and does not determine actual federal or state tax liability.
Consider professional advice when:
Always consult a qualified tax professional for your specific situation.
Calculate as: Amount Realized − Adjusted Basis = Total Gain. Then separate depreciation recapture from capital gains. Depreciation is taxed at up to 25%, and remaining gain is taxed at capital gains rates.
When you sell a rental property, you may owe tax on the gain. Depreciation claimed during the rental period is recaptured and taxed at up to 25%, and remaining gain is taxed at capital gains rates.
Depreciation reduces your adjusted basis, which increases your taxable gain. It also triggers depreciation recapture, which is taxed as ordinary income up to 25% for residential rental property.
Adjusted basis is: Purchase Price + Improvements + Other Adjustments − Depreciation. Depreciation reduces your basis, which increases your taxable gain when you sell.
Yes. Qualifying capital improvements that add value, extend the property's life, or adapt it to new uses increase your basis. Examples include new roofs, HVAC systems, additions, and major renovations.
Yes. Selling expenses such as real estate commissions, legal fees, and closing costs reduce your amount realized, which reduces your gain.
Yes. Rental property involves depreciation, recapture, and different exclusion rules. The primary home-sale exclusion does not apply to rental property in the same way.
Depreciation-related gain is the portion of your total gain attributable to depreciation claimed during the rental period. It may be taxed at different rates than ordinary capital gains.
Yes, in many states. State tax treatment varies widely. Some states have no capital gains tax, while others tax it as ordinary income. Check with your state's tax authority.
If you sell for less than your adjusted basis, you have a capital loss. Losses from rental property may be deductible against other income, subject to passive activity loss rules.
No. The home-sale exclusion generally applies to primary residences only. Rental properties and investment properties have different tax treatment.
No. This calculator provides an estimate for educational purposes only. Actual tax liability depends on many factors including basis, depreciation, income, filing status, and federal and state rules.
Our team of financial writers, tax researchers, and technical developers work together to deliver clear, accurate, and useful tax calculators and guides for U.S. taxpayers. We are committed to helping you understand your taxes better and make informed financial decisions.
Learn More About Our Team →