Home Sale Capital Gains Calculator

Enter what you paid, what you improved, what you are selling for and how you used the home, and get the taxable gain after the §121 exclusion, the federal tax at the 2026 long-term rates, net investment income tax, depreciation recapture on a rental, state tax and what you keep.

The calculator follows IRS Publication 523 step by step: adjusted basis (price plus purchase costs plus improvements, minus any depreciation), the amount realized (sale price minus selling costs), the gain, the §121 exclusion you qualify for, and then the tax. Federal tax uses the 2026 long-term capital-gains bands with the gain stacked on top of your other taxable income, so part of a gain can fall in the 0% band and the rest at 15% or 20%; depreciation you claimed on a rental is taxed separately at up to 25%; the 3.8% net investment income tax applies once your income with the gain crosses the threshold; and a home held a year or less is taxed as ordinary income. Enter your state’s rate for the full picture.

How much is capital gains tax on a home sale?

Most owner-occupiers pay nothing: up to $250,000 of gain is excluded from federal tax ($500,000 for a married couple filing jointly) when the house was your main home for at least two of the five years before the sale. Above that, the gain is taxed at the 2026 long-term rates of 0%, 15% or 20% depending on your taxable income, plus 3.8% net investment income tax for higher earners and whatever your state charges. A single seller with $90,000 of other income and a $319,500 gain owes about $10,425 federal on the $69,500 above the exclusion (15%), plus $3,475 at a 5% state rate.

Gain is not sale price minus purchase price. It is the amount realized (price minus commissions, transfer tax and other selling costs) minus the adjusted basis (what you paid, plus closing costs when you bought, plus capital improvements, minus depreciation). A couple who bought for $250,000, spent $30,000 on a kitchen and roof and sold for $550,000 with 7% of costs has a gain of $226,500 — well under their $500,000 exclusion, so $0 tax. The sale proceeds calculator gives you the selling-cost figure; the home appreciation calculator shows how the gain built up.

The §121 exclusion: who qualifies for $250,000 or $500,000

Section 121 of the tax code lets you exclude gain on the sale of your main home if, during the five years ending on the sale date, you owned it for at least two years and lived in it as your main home for at least two years (730 days, not necessarily continuous or the same two years). You can use it once every two years. The amount is $250,000 per taxpayer; a married couple filing jointly gets $500,000 if either spouse meets the ownership test and both meet the use test, and a surviving spouse keeps the $500,000 for a sale within two years of the death.

Partial exclusion when you sell early

If you sell before two years because of a job move (new workplace at least 50 miles farther from the home), health (a doctor-recommended move for you or a family member) or an unforeseeable event (death, divorce, multiple births, job loss qualifying for unemployment, a change that leaves you unable to pay the basic living costs), the exclusion is prorated by the time you qualified: months ÷ 24 × the full amount. Twelve months of ownership and use for a job move gives a single seller $125,000 — enough for almost any one-year gain.

What reduces or removes it

• Non-qualified use: years after 2008 when the home was a rental or second home before it became your main home are carved out of the exclusion in proportion to the ownership period (periods of rental after you move out, within the five-year window, do not count against you).
• Depreciation claimed after May 6, 1997 for a rental period or a home office is never excluded; it is taxed as unrecaptured §1250 gain at up to 25%.
• Second homes, investment property and flips get no exclusion, which is where the brackets below do the work.

2026 capital gains tax brackets on real estate

Long-term capital gains (property held more than one year) are taxed at 0%, 15% or 20%, but not in the way people assume. The gain is stacked on top of your other taxable income: the part of the gain that falls below the 0% threshold is untaxed, the part between the thresholds is taxed at 15%, and only the part above the 15% ceiling is taxed at 20%. The thresholds are taxable income (after the standard or itemised deduction), inflation-adjusted each year; these are the 2026 figures from Rev. Proc. 2025-32.

Three consequences. A retired couple with $40,000 of taxable income can realise about $58,900 of gain above the exclusion at 0%. A high earner pays 20% plus 3.8% NIIT — 23.8% federal — on a large taxable gain; a single filer with $300,000 of income selling with a $816,000 gain owes about $122,433 federal on the $566,000 above the exclusion. And timing matters: a sale in a low-income year (between jobs, the first year of retirement) can move a six-figure slice of gain from 15% to 0%. Depreciation recapture on a rental is taxed at your ordinary rate capped at 25% and sits below the capital-gains portion in the stack, which is why the calculator asks for your ordinary marginal rate.

Worked examples: primary home, rental, inherited house, flip

Five sales at 7% selling costs and a 5% state rate, run through the calculator. The first two use the $250k/$500k exclusion; the rental shows depreciation recapture; the inherited house shows how a stepped-up basis wipes out most of the gain; the flip shows short-term treatment.

Sanity-check your own case against the row that resembles it, then change one input at a time in the calculator: adding $20,000 of documented improvements cuts a 15%-band tax by $3,000 plus state; selling a rental in a year with $50,000 less income can pull part of the gain into the 0% band; waiting a few months to pass the one-year mark turns a flip’s ordinary-rate bill into a long-term one.

What counts as basis, improvements and selling costs

Basis is where most people leave money on the table, because they never add up what they spent. Pull the settlement statement from when you bought, then list every improvement that is still part of the house. The IRS test is whether the work adds value, prolongs useful life or adapts the home to a new use; repairs that merely keep it in working order do not count, but a repair done as part of a larger improvement (new drywall during a remodel) does.

Decision: if you are within a few years of selling a home that has gained more than the exclusion, start a basis file now — receipts, contracts, permits, before-and-after photos. Without records the IRS can disallow the improvement, and reconstructing a 2009 kitchen remodel from bank statements is slow. For a rental, the depreciation you were allowed to claim reduces basis whether or not you claimed it, so an owner who skipped depreciation still pays recapture on it — another reason to have a preparer look at the return.

Selling a rental property: depreciation recapture, 1031 exchanges and converting it first

A rental sale has three layers of federal tax. Unrecaptured §1250 gain — the gain attributable to depreciation you claimed (or could have) — is taxed at your ordinary rate but capped at 25%. The rest of the long-term gain is taxed at 0/15/20%. And the whole taxable gain counts as net investment income for the 3.8% NIIT. On the example rental above, $58,000 of depreciation produces $12,760 of recapture tax, the remaining $117,000 of gain is taxed at 15% ($17,550), NIIT adds $1,710 and state tax $8,750, for $40,770 in all — 23% of the gain.

Ways to reduce it

• 1031 exchange: sell the rental and buy another investment property through a qualified intermediary — identify replacements within 45 days and close within 180 days — and the entire gain, recapture included, is deferred. It does not work for a home you live in.
• Move in first: live in the rental as your main home for two years and the §121 exclusion applies to the gain, except the depreciation (always recaptured) and the share of gain allocated to non-qualified rental years after 2008. Two years of use after eight years of renting excludes roughly a fifth of the non-depreciation gain, not all of it.
• Instalment sale: taking payments over several years spreads the capital-gains portion across tax years (recapture is still taxed in the year of sale).
• Harvest losses in the same year: capital losses on stocks offset the gain dollar for dollar.
• Time the sale for a year with lower other income, which can move part of the gain down a band.

Track the equity you are sitting on with the home equity calculator; if the property is an investment, compare holding versus selling with the buy vs. invest tool.

Inherited and gifted homes, state tax, and how the sale is reported

Inherited property gets a stepped-up basis: your basis is the fair market value on the date of death, not what the deceased paid, and the gain is automatically long-term. Sell within a year or so and the gain is usually small — the $12,900 in the example above is what was left of a $50,000 price rise after selling costs — and a sale below the appraised value produces a deductible loss on an inherited house you never lived in. Gifted property is the opposite: you take the giver’s basis (carryover), so a parent gifting a house bought for $80,000 hands over a large built-in gain; inheriting the same house would have wiped it out.

State tax: most states tax capital gains as ordinary income at rates from about 2.5% to 13.3% (California); nine states have no tax on this gain — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington (its 7% capital-gains tax exempts real estate) and Wyoming. Most states follow the federal §121 exclusion. Enter your state’s rate in the calculator; a non-resident selling property still owes tax to the state where it sits, and several states withhold at closing (California 3⅓% of the price, Maryland, New Jersey and others) and let you claim it back on the return.

Reporting: the closing agent sends Form 1099-S unless you certify that the full gain is excluded. If you receive one, or the gain exceeds the exclusion, report the sale on Form 8949 and Schedule D; depreciation recapture goes on Form 4797; NIIT on Form 8960. If no 1099-S is issued and the whole gain is excluded, nothing goes on the return. Taxes are due with the return (or as an estimated payment in the quarter of the sale to avoid a penalty). This page is not tax advice — the rules have exceptions for military and foreign-service postings, divorces, trusts and mixed-use property that only a preparer with your records can apply.