Real Estate Capital Gains Tax CalculatorCapital gains tax on the sale of a home, rental or land: what you’ll owe and how to legally owe less
See exactly how your profit is taxed: the $250,000 or $500,000 home-sale exclusion, depreciation recapture at up to 25%, where your gain lands in the 0%, 15% and 20% brackets, the 3.8% net investment income tax and state tax. Then compare a 1031 exchange, an installment sale or simply waiting.
By Manzoor Ahmad · 13+ years of web development & SEO experienceUpdated October 20, 2026 · Rev. Proc. 2025-32 figures
Enter your sale
The sale Amount realized: $0
Your cost basis Adjusted basis: $0
Home-sale exclusion Section 121
Your tax picture 2026 brackets
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Where your gain lands in the 2026 brackets
Capital gains are stacked on top of your other taxable income. The background shows the 0%, 15% and 20% zones for your filing status.
Anatomy of your sale price
How much of the price is a tax-free return of your own money, how much is excluded profit, and how much goes to tax.
Ways to pay less, run on your numbers
Each card recalculates your tax under a different legal strategy. Talk to a tax professional before acting on any of them.
How is capital gains tax on real estate calculated?
Capital gains tax on real estate is charged on your profit, not the sale price. Subtract your selling costs from the price to get the amount realized, then subtract your adjusted basis: what you paid, plus purchase closing costs and improvements, minus any depreciation you claimed.
For a primary home you’ve owned and lived in for two of the last five years, the first $250,000 of gain ($500,000 if married filing jointly) is tax-free. Depreciation is taxed at up to 25%. The rest of a long-term gain is taxed at 0%, 15% or 20% depending on your income, plus 3.8% NIIT for high earners and any state tax.
2026 capital gains tax rates on property
Long-term rates apply to property held for more than one year. The brackets below are for total taxable income, including the gain itself (IRS Rev. Proc. 2025-32).
| Rate | Single | Married filing jointly | Head of household |
|---|---|---|---|
| 0% | Up to $49,450 | Up to $98,900 | Up to $66,200 |
| 15% | $49,451 – $545,500 | $98,901 – $613,700 | $66,201 – $579,600 |
| 20% | Over $545,500 | Over $613,700 | Over $579,600 |
| +3.8% NIIT | MAGI over $200,000 | MAGI over $250,000 | MAGI over $200,000 |
| Recapture (§1250) | Ordinary rate, max 25% | Ordinary rate, max 25% | Ordinary rate, max 25% |
| Short-term (≤1 year) | 10%–37% ordinary rates | 10%–37% ordinary rates | 10%–37% ordinary rates |
The 2026 standard deduction ($16,100 single, $32,200 joint, $24,150 head of household) is subtracted before the brackets apply, and this calculator does that for you. Your income determines which part of the gain falls in each bracket. A large gain often straddles two rates, which is why the bracket chart above is more accurate than a single-rate estimate.
The $250,000 / $500,000 home-sale exclusion, explained
Section 121 lets most homeowners sell without owing any federal capital gains tax. Three tests decide whether you get it.
You owned the home for at least 24 months in the five years before the sale.
You lived in it as your main home for at least 24 months in those five years. The months don’t have to be consecutive.
You haven’t excluded gain on another home sale in the two years before this one.
Married couples get the full $500,000 if either spouse meets the ownership test and both meet the use test. If you fall short because of a job relocation, a health issue or another unforeseen circumstance, you can usually claim a partial exclusion in proportion to the time you qualified. For example, 12 months out of 24 gives half the exclusion. Two traps the exclusion doesn’t cover: depreciation you claimed for a home office or rental use after May 6, 1997, and gain from periods of “nonqualified use” when you rented the home out before moving in.
Capital gains tax on a home vs. a rental: two real calculations
- Sale $950,000 − 6% selling costs = $893,000 realized
- Basis: $280,000 price + $4,000 closing + $60,000 improvements = $344,000
- Gain $549,000 − $500,000 exclusion = $49,000 taxable
- Taxable income before the gain is $107,800, already above the 0% band, so all of it is taxed at 15% = $7,350
- MAGI of $189,000 is under $250,000, so no NIIT
Federal tax: $7,350, or 1.3% of the total gain. Without the exclusion the bill would be more than ten times higher.
- Bought for $300,000 (20% land) plus $4,000 closing, $15,000 improvements
- Depreciation: $240,000 ÷ 27.5 × 10 years ≈ $87,273
- Sold for $450,000 − 6% = $423,000 → gain of $191,273
- Recapture $87,273 taxed in the 22% bracket = $19,200; remaining $104,000 at 15% = $15,600
- NIIT: MAGI $331,273 is $81,273 over the threshold × 3.8% = $3,088
Total federal tax: $37,888, about 20% of the gain. A 1031 exchange into another rental would defer all of it.
Depreciation recapture: the tax rental owners forget
Every year you own a rental, the IRS lets you deduct part of the building’s cost as depreciation: 1/27.5 of the building value for residential property and 1/39 for commercial. That lowers your tax while you own it, but it also lowers your basis. When you sell, the gain created by that depreciation is called unrecaptured Section 1250 gain and is taxed at your ordinary rate, capped at 25%.
Important: recapture is based on depreciation “allowed or allowable”. If you never claimed depreciation on a rental, the IRS still reduces your basis as if you had, so you pay the recapture tax without having had the deduction. Our depreciation recapture calculator breaks this part down year by year.
What counts as a capital improvement (and what doesn’t)
Every dollar of documented improvements raises your basis and cuts your taxable gain. Repairs and maintenance don’t count.
New bedroom, bathroom, deck, garage, finished basement, kitchen remodel.
New roof, HVAC, water heater, wiring, plumbing, septic system, solar panels.
Landscaping, driveway, fencing, pool, retaining walls, new siding or windows.
Title insurance, transfer tax, recording and legal fees you paid when you bought.
Fixing a leak, patching drywall, replacing a broken window pane, repainting a room.
An improvement you later replaced, like a 2010 roof replaced in 2022, no longer counts.
How to avoid capital gains tax on real estate, legally
| Strategy | Works for | What it does |
|---|---|---|
| Section 121 exclusion | Primary homes | Excludes up to $250,000 / $500,000 of gain permanently |
| Hold more than one year | All property | Moves gain from ordinary rates (up to 37%) to 0%–20% |
| 1031 like-kind exchange | Rentals, investment, land | Defers all gain and recapture if you reinvest in like-kind property within the deadlines |
| Installment sale | Seller-financed sales | Spreads the gain over the years you receive payments, often keeping it in lower brackets |
| Sell in a low-income year | All property | More of the gain falls in the 0% or 15% band, and NIIT may not apply |
| Harvest investment losses | All property | Capital losses from stocks or other assets offset the gain dollar for dollar |
| Hold until death | All property | Heirs receive a stepped-up basis, wiping out the built-in gain |
If you’re weighing an exchange, model the reinvestment with our 1031 exchange calculator. If you’d rather keep the property, run the numbers on holding it with the rental property calculator.
Selling an inherited house: the stepped-up basis
When you inherit property, your basis is generally its fair market value on the date of death, not what the original owner paid. Inherited property is also always treated as long-term, however soon you sell. If a parent bought a house for $90,000 and it was worth $410,000 when they died, your basis is $410,000. Selling for $425,000 less 6% costs ($399,500) produces a loss, not a $300,000+ gain. Get a date-of-death appraisal, as it’s the best evidence of your basis. Select Inherited above to use it.
Related property calculators
See every tool for buying, selling and investing in our property and real estate calculators hub.
Real estate capital gains tax questions
How much capital gains tax will I pay when I sell my house?
If it’s your primary home and you lived there two of the last five years, you pay nothing on the first $250,000 of gain ($500,000 married filing jointly). Gain above that is taxed at 0%, 15% or 20% depending on your income, plus 3.8% NIIT at higher incomes and any state tax.
What is the capital gains tax rate on real estate in 2026?
For property held more than a year: 0% if taxable income is up to $49,450 single or $98,900 married filing jointly, 15% up to $545,500 single or $613,700 joint, and 20% above that. Depreciation recapture is taxed at up to 25%, and short-term gains at ordinary rates up to 37%.
How do I calculate the capital gain on a property sale?
Take the sale price, subtract selling costs, then subtract your adjusted basis: purchase price plus purchase closing costs and capital improvements, minus any depreciation claimed. The result is your capital gain.
Do I pay capital gains if I buy another house?
For a primary home, buying a replacement doesn’t defer the tax; that rule ended in 1997. The $250,000/$500,000 exclusion replaced it. For investment property, a 1031 exchange into another investment property can defer the tax.
How long do I need to live in a house to avoid capital gains?
At least 24 months within the five years before the sale, and you must have owned it for 24 months too. A partial exclusion may apply if you move earlier for work, health or unforeseen circumstances.
What is the capital gains tax on a rental property?
Rental gains don’t get the home-sale exclusion. Depreciation you claimed is taxed at up to 25%, the rest of the gain at 0%, 15% or 20%, and the 3.8% NIIT usually applies above $200,000 or $250,000 of income.
Is capital gains tax due at closing?
No. The title company may report the sale to the IRS on Form 1099-S, but you pay the tax when you file your return. If the bill is large, you may need to make an estimated tax payment for the quarter of the sale to avoid a penalty.
Do closing costs reduce capital gains?
Yes. Selling costs such as commission, title fees and transfer taxes reduce your amount realized, and many closing costs you paid when buying are added to your basis. Both lower the taxable gain.
Does the 3.8% net investment income tax apply to home sales?
Only to the gain that isn’t excluded, and only if your modified adjusted gross income exceeds $200,000 single or $250,000 married filing jointly. Excluded home-sale gain is not subject to NIIT.
How is an inherited house taxed when sold?
Your basis is usually the fair market value at the date of death, and the gain is always long-term. Selling soon after inheriting often produces little or no taxable gain.
Do states tax capital gains on real estate?
Most states tax capital gains as ordinary income at their own rates. States with no income tax, such as Texas, Florida and Nevada, don’t, and Washington’s capital gains tax exempts real estate.
Is this real estate capital gains tax calculator free and private?
Yes. It’s free, needs no sign-up and runs entirely in your browser. Nothing you enter is sent to DexoCalc or stored.
Manzoor Ahmad
13+ years of web development & SEO experience · Founder, DexoCalc
Manzoor builds and maintains every DexoCalc calculator, including the full property and tax libraries. This calculator follows the IRS capital gains worksheet logic: it stacks the gain on your other income using the 2026 brackets, taxes unrecaptured Section 1250 gain at up to 25%, applies the Section 121 exclusion including partial exclusions, and adds NIIT and state tax.
Sources
- IRS Publication 523 — Selling Your Home
- IRS Publication 544 — Sales and Other Dispositions of Assets
- IRS Publication 527 — Residential Rental Property (depreciation)
- IRS Topic No. 409 — Capital Gains and Losses
- IRS — Net Investment Income Tax
- Accounting Today — IRS inflation adjustments for 2026 (Rev. Proc. 2025-32)
- 2026 long-term capital gains brackets and NIIT thresholds
This calculator gives an estimate for planning, not tax advice. It uses 2026 federal brackets with the standard deduction and doesn’t model AMT, itemized deductions, credits, other capital gains or losses, nonqualified-use rules or every state’s rules. Talk to a CPA or enrolled agent before you sell.