Know the bill before you list

Rental Property Capital Gains Tax Calculator

Selling a rental usually triggers two taxes most owners forget about: tax on the depreciation you've written off over the years, and capital gains tax on the rest of your profit. See your estimated bill below — then see how a 1031 exchange could let you postpone all of it.

Your Sale

Your Tax Rates

Why the bill is bigger than people expect

Most sellers plan for capital gains tax on their profit. What surprises them is the second tax: every dollar of depreciation you've claimed over the years gets taxed at up to 25% when you sell, even if you never noticed the deduction because your tax preparer handled it. On a rental held 10+ years, depreciation recapture is often the bigger of the two taxes.

Your profit for tax purposes also isn't "sale price minus what I paid." Depreciation lowers what you have into the property on paper, which pushes your taxable profit up. That's why a property that "only" went up $150,000 can produce a $250,000 taxable gain.

Postpone this entire bill with a 1031 exchange →Roll your sale into a new investment property and see the tax get deferred

Common Questions

How is profit on a rental calculated for taxes?

Start with your sale price, subtract selling costs, then subtract what you have into the property: the original price plus improvements, minus all depreciation claimed. Because depreciation lowers that number, your taxable profit is usually larger than your actual cash profit.

What tax rates apply when I sell a rental?

Up to three layers: depreciation recapture at a maximum of 25% on the depreciation you claimed, federal long-term capital gains at 0%, 15%, or 20% on the rest, and your state income tax. Higher earners may also owe the 3.8% net investment income tax.

Can I avoid this tax completely?

A 1031 exchange postpones it indefinitely by rolling the sale into another investment property, and heirs who inherit the property may receive a stepped-up basis that erases the deferred gain. Simply selling and keeping the cash means paying the full bill.

Keep Reading

1031 Exchange CalculatorSee exactly how much of this bill an exchange could postpone.Depreciation Recapture CalculatorIsolate the tax on your past write-offs.1031 vs. Just Paying the TaxWhen an exchange is worth it — and when it isn't.