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Real Estate Capital Gains Tax Calculator

Estimate your potential federal capital gains tax liability when selling a property. This calculator considers your adjusted basis, selling costs, potential primary residence exclusion, and your income tax bracket to provide an estimate for long-term capital gains.

Cost of major renovations that added value (e.g., new roof, addition).
Total depreciation claimed if the property was used for rental or business.
Agent commissions, legal fees, transfer taxes, etc.

Check this if you owned and lived in the home as your primary residence for at least 2 of the 5 years prior to the sale. This may exclude up to $250k (single) or $500k (married) of gain.

Single Married Filing Jointly
Used to determine your long-term capital gains tax bracket.

Calculation Results

Adjusted Basis:
$0.00
Net Sale Proceeds:
$0.00
Total Realized Gain:
$0.00
Proceeds minus Basis
Taxable Gain (after exclusion):
$0.00
Estimated Federal Tax:
$0.00
Based on estimated long-term rate

* Note: This is an estimate for federal long-term capital gains tax only. It does not account for state taxes, depreciation recapture tax (which is taxed at a different rate), or the Net Investment Income Tax (NIIT) for high earners. Consult a qualified tax professional for final calculations.

function calculateCapitalGains() { // 1. Get input values and handle invalid numbers var purchasePrice = parseFloat(document.getElementById("purchasePrice").value) || 0; var improvements = parseFloat(document.getElementById("improvements").value) || 0; var depreciation = parseFloat(document.getElementById("depreciation").value) || 0; var salePrice = parseFloat(document.getElementById("salePrice").value) || 0; var sellingCosts = parseFloat(document.getElementById("sellingCosts").value) || 0; var annualIncome = parseFloat(document.getElementById("annualIncome").value) || 0; var filingStatus = document.getElementById("filingStatus").value; var primaryExclusionChecked = document.getElementById("primaryExclusion").checked; // Basic validation if (purchasePrice <= 0 || salePrice <= 0) { alert("Please enter valid positive numbers for Purchase Price and Sale Price."); return; } // 2. Calculate Adjusted Basis // Basis = Purchase Price + Improvements – Depreciation var adjustedBasis = purchasePrice + improvements – depreciation; // Ensure basis doesn't go negative in simplified view, though theoretically possible with high depreciation. adjustedBasis = Math.max(0, adjustedBasis); // 3. Calculate Net Sale Proceeds // Proceeds = Sale Price – Selling Costs var netProceeds = salePrice – sellingCosts; // 4. Calculate Total Realized Gain // Gain = Net Proceeds – Adjusted Basis var totalGain = netProceeds – adjustedBasis; // 5. Apply Primary Residence Exclusion var exclusionAmount = 0; if (primaryExclusionChecked) { if (filingStatus === "single") { exclusionAmount = 250000; } else if (filingStatus === "married") { exclusionAmount = 500000; } } // Taxable Gain cannot be less than zero var taxableGain = Math.max(0, totalGain – exclusionAmount); // 6. Determine Long-Term Capital Gains Tax Rate // Using simplified 2023/2024 brackets for estimation. var taxRate = 0; if (filingStatus === "single") { if (annualIncome < 44625) { taxRate = 0.00; } else if (annualIncome < 492300) { taxRate = 0.15; } else { taxRate = 0.20; } } else if (filingStatus === "married") { if (annualIncome < 89250) { taxRate = 0.00; } else if (annualIncome < 553850) { taxRate = 0.15; } else { taxRate = 0.20; } } // 7. Calculate Estimated Tax var estimatedTax = taxableGain * taxRate; // Formatting helper function function formatCurrency(num) { return "$" + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,'); } // 8. Display Results document.getElementById("resultBasis").innerHTML = formatCurrency(adjustedBasis); document.getElementById("resultProceeds").innerHTML = formatCurrency(netProceeds); document.getElementById("resultTotalGain").innerHTML = formatCurrency(totalGain); document.getElementById("resultTaxableGain").innerHTML = formatCurrency(taxableGain); document.getElementById("resultEstimatedTax").innerHTML = formatCurrency(estimatedTax); document.getElementById("taxRateLabel").innerHTML = "Based on estimated " + (taxRate * 100).toFixed(0) + "% long-term rate"; // Show results area document.getElementById("resultsArea").style.display = "block"; }

Understanding Capital Gains Tax when Selling Real Estate

When you sell a property for more than you paid for it, the profit is considered a capital gain and is subject to taxation. For real estate, calculating this gain correctly is crucial and involves more than just subtracting your buying price from your selling price. Here is a breakdown of the key concepts used in our calculator.

1. Adjusted Basis: The True Cost of Your Property

Your tax liability is based on the difference between your net selling price and your "adjusted basis," not your original purchase price. Your basis starts with what you paid for the property but changes over time:

  • + Increases to Basis: The cost of capital improvements adds to your basis. These are substantial renovations that add value, extend the property's useful life, or adapt it to new uses, such as adding a room, replacing a roof, or installing a new HVAC system. Regular repairs and maintenance do not count.
  • – Decreases to Basis: If you held the property as a rental or for business use, you likely claimed depreciation deductions on your taxes each year. The total amount of depreciation you claimed (or could have claimed) must be subtracted from your basis. This lowers your basis, which increases your potential taxable gain upon sale.

The formula is: Adjusted Basis = Original Purchase Price + Capital Improvements – Depreciation Taken.

2. Net Sale Proceeds

You aren't taxed on the gross sale price. You can deduct substantial selling costs to arrive at your net proceeds. These costs typically include real estate agent commissions, legal fees, title insurance, advertising costs, and transfer taxes paid by the seller.

Your Total Realized Gain is simply your Net Sale Proceeds minus your Adjusted Basis.

3. The Section 121 Primary Residence Exclusion

This is one of the most significant tax benefits for homeowners. If you meet the ownership and use tests, you can exclude a large portion of your capital gain from taxation.

  • Ownership Test: You must have owned the home for at least two years total during the five-year period ending on the date of sale.
  • Use Test: You must have used the home as your primary residence for at least two years total during that same five-year period.

If you qualify, you can exclude up to $250,000 of gain if you are a single filer, or up to $500,000 if you are married filing jointly. This calculator allows you to apply this exclusion to see how it significantly reduces your taxable gain.

4. Long-Term vs. Short-Term Capital Gains Tax Rates

The length of time you own the property determines your tax rate.

  • Short-Term: If you owned the property for one year or less, the gain is taxed as ordinary income at your regular tax bracket, which can be as high as 37%.
  • Long-Term: If you owned the property for more than one year, you qualify for preferential long-term capital gains tax rates, which are 0%, 15%, or 20%, depending on your taxable income and filing status. This calculator estimates taxes based on these long-term rates.

Note that for rental properties, the portion of the gain attributable to depreciation is taxed differently, known as "unrecaptured section 1250 gain," and is typically capped at 25%. This calculator provides a general estimate of federal capital gains tax and does not calculate the specific depreciation recapture tax or state taxes.

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