Capital Gains Tax Calculator

Capital gain = sale price − selling costs − adjusted cost basis. Adjusted cost basis = original purchase price + capital improvements (additions, renovations, new roof, etc.) − depreciation taken (if used as a rental). Selling costs include agent commissions, closing costs, and any seller-paid concessions. The result is your gross gain before any exclusions.

IRS Section 121 lets primary-residence sellers exclude up to $250,000 of capital gain (single) or $500,000 (married filing jointly) from federal taxes — if they owned AND lived in the home for at least 2 of the last 5 years (the "2-out-of-5" rule). You can use this exclusion once every 2 years. For most owner-occupied home sales, this exclusion wipes out the entire tax bill.

Long-term (held more than 1 year): 0%, 15%, or 20% depending on your total taxable income. Short-term (held 1 year or less): taxed as ordinary income — same as your wage tax bracket, up to 37%. For most homeowners selling after several years, the long-term rate applies. Hold for less than a year, and the tax bill jumps significantly.

If you rented the home (or claimed home-office deductions), you took depreciation against the property each year. When you sell, the IRS "recaptures" that depreciation by taxing it at a flat 25% — regardless of your income bracket. This is separate from capital gains tax and is not eligible for the Section 121 exclusion. A common surprise for accidental landlords who didn't track this.

Only federal taxes. State capital gains tax varies widely — 0% in states like Texas, Florida, Tennessee, and Washington (no state income tax); up to 13.3% in California. We added a "state tax rate" field so you can estimate, but check your specific state's rules or talk to a CPA.

For investment properties only (not primary residences): you can defer the entire capital gain by reinvesting proceeds into another investment property within strict deadlines (45 days to identify, 180 days to close). The original gain is deferred, not eliminated — you owe it eventually, but you can keep deferring through repeated 1031s. Has technical rules — consult a qualified intermediary.

Net Investment Income Tax (NIIT, 3.8% on certain investment income above MAGI thresholds), Alternative Minimum Tax interactions, state-specific quirks, partial exclusion rules for unforeseen circumstances (job change, health, etc.), inherited basis step-up details, and timing strategies. This is a planning tool — file with a CPA for high-stakes situations.