Calculator
Rental Property Sale Tax
Every year you owned it, depreciation cut your taxable rental income and cut your basis by the same amount. Selling calls all of it back. The gain therefore splits into depreciation recaptured — taxed at your ordinary rates, capped at 25%, and almost universally described as a flat 25% it is not — and real appreciation at 0/15/20, with the 3.8% surtax over the top of both. This prices each piece, works out what the sale costs against a year without it, and fills in the depreciation figure for anyone who never tracked it, because it is recaptured whether or not it was ever claimed.
What the sale costs
Enter what you paid, what you are selling for, and the depreciation you have taken, then press Calculate.
The property
What you paid should include the closing costs that were added to basis at purchase — title, recording, transfer tax — but not loan points or prepaid interest.
Improvements are capital: a new roof, an addition, a full kitchen. Repairs and repainting were deducted in the year you paid for them and do not go here.
Depreciation is the accumulated total from the depreciation schedule of your last return. If you never took it, you are still taxed as though you had — the statute says “allowed or allowable” — so use the estimate rather than a zero.
Plus capitalized closing costs
A roof, not a repaint
Rented, not lived in
Land is never depreciated
Straight line over 27.5 years on the building only
The sale, and your year
Selling costs — agent commission, transfer taxes, legal — reduce the amount realized, so every dollar of them is a dollar less gain. They are worth entering properly.
Other income decides everything. Depreciation recapture is taxed at your ordinary rates capped at 25%, and the gain is stacked on top of whatever else you earn — so the same sale costs two sellers very different amounts.
Suspended losses are passive losses disallowed in earlier years. A fully taxable sale releases all of them at once, against income of any kind. They are on Form 8582 of your last return, and they are frequently the largest reduction on the whole page.
Contract price
Commission, transfer, legal
Only affects the cash
Sets brackets and thresholds
Wages, business, pensions
Released by the sale
Interest, dividends, other gains — for the 3.8% surtax
Figures use published 2026 federal amounts. Tax law changes; re-check against IRS, CMS, and HHS sources before acting. Federal only — state income tax on the gain is not modeled, and in a high-tax state it is often the largest single line on the bill.
For educational purposes only. Results are estimates and do not constitute financial, tax, or legal advice. Consult a qualified professional before making any financial decisions.
How to use it
What you paid should include the closing costs that were capitalized at purchase — title, recording, transfer tax — but not loan points or prepaid interest, which were deducted separately.
Improvements are capital: a new roof, an addition, a full kitchen. Repairs and repainting were deducted in the year you paid for them and do not belong here. Putting them in twice is a common and expensive error in the seller's favor, which is a bad kind to make.
Depreciation is the accumulated total from the depreciation schedule of your last filed return. If you cannot find it, use the estimator — it applies straight-line over 27.5 years to the building share of the price, which is the same arithmetic your preparer would have run.
Suspended passive losses are on Form 8582 of your last return. For a long-held rental they are often the largest single reduction on this page, and most calculators do not ask for them at all.
The two schedules the gain is taxed on
Every year you owned it, depreciation reduced your taxable rental income and reduced your basis by the same amount. Selling calls all of it back. So the gain arrives in two pieces that look identical on a closing statement and are taxed on two different schedules.
Depreciation recaptured — unrecaptured §1250 gain — is taxed at your ordinary rates and capped at 25%. It is described as a flat 25% nearly everywhere, and that is wrong in the seller's favor: somebody whose other income leaves them in the 12% bracket pays 12% on the part of it that fits there.
Actual appreciation is long-term capital gain at 0%, 15% or 20%, stacked on top of your ordinary income and the recapture. Then the 3.8% surtax takes its share of both, and a gain of any size is usually what pushes modified AGI over the $200,000 or $250,000 threshold in the first place.
Depreciation you never took is recaptured anyway
The statute reduces basis by depreciation allowed or allowable. A landlord who never claimed a cent of it has their basis reduced exactly as though they had, and is taxed on the way out for a deduction they never received.
This catches accidental landlords hardest — someone who moved out, rented the old house for a decade, never treated it as a business, and is now told they owe recapture on depreciation they can prove they never deducted. The proof does not help.
It is fixable, but not by entering zero here. Missed depreciation is generally recovered by filing Form 3115 to change accounting method and claiming the whole omitted amount as a catch-up adjustment in one year — a real filing, worth an accountant, and worth starting before the sale rather than after it.
Assumptions and limits
- State tax is not modeled, and in California, New York, or New Jersey it is frequently the largest single line on the bill. Several states also withhold on the sale itself where the seller lives elsewhere.
- The Schedule D Tax Worksheet is more intricate than the stack modeled here. This taxes the recapture immediately above your ordinary income and stacks the long-term gain above both against the published breakpoints, which agrees with the worksheet for the overwhelming majority of returns.
- The headline figure is a difference: the whole return is computed with the sale and again without it. That is what the decision costs, rather than what the year costs — and the two are not the same number.
- Not modeled: the §121 exclusion where the property was once your main home, which brings periods of non-qualified use with it; installment sales; the alternative minimum tax; and credits of any kind. A §1031 exchange defers the entire bill and carries it into the replacement property's basis.
- An estimate for planning. Not tax advice — a sale this size is worth an hour of a CPA's time before the closing date is set, not after.