How to Use the Calculator
Step-by-step guide to calculating your capital gains tax accurately
🚀 Quick Start Guide
Get results in under 2 minutes with these simple steps
Enter Property Details
Purchase price, sale price, and improvement costs
Add Personal Information
Income, filing status, and property type
Get Your Results
Instant calculation with detailed breakdown
📋 Detailed Instructions
🏠 Property Information
Purchase Price
What to enter: The original price you paid for the property
Example: $250,000
Tips: This is the amount on your closing documents, not including closing costs
Purchase Date
What to enter: The date you officially closed on the property
Example: January 15, 2022
Why it matters: Determines if gains are long-term (12+ months) or short-term
Purchase Costs
What to enter: Closing costs, title fees, inspection fees
Example: $5,000
Includes: Attorney fees, title insurance, recording fees, survey costs
Home Improvements
What to enter: Capital improvements that add value
Example: $25,000
Includes: Kitchen remodels, additions, major renovations
Excludes: Repairs, maintenance, minor fixes
Depreciation Claimed (Investment Properties Only)
What to enter: Total depreciation claimed on tax returns
Example: $15,000
Note: This field only appears for investment properties
💰 Sale Information
Sale Price
What to enter: The price you're selling the property for
Example: $350,000
Tips: Use the final sale price from your purchase agreement
Sale Date
What to enter: Expected or actual closing date
Example: December 1, 2024
Usage: Used to calculate ownership period
Selling Costs
What to enter: Real estate commissions and selling expenses
Example: $21,000
Includes: Realtor fees, staging costs, marketing expenses, attorney fees
Typical: 6-8% of sale price
📊 Personal Tax Information
Annual Income
What to enter: Your total annual taxable income
Example: $75,000
Includes: Wages, business income, other investments
Why important: Determines your tax bracket
Filing Status
Options:
- Single: Unmarried individuals
- Married Filing Jointly: Married couples filing together
- Married Filing Separately: Married couples filing separate returns
- Head of Household: Single with qualifying dependents
Property Type
Primary Residence: Your main home (eligible for $250K/$500K exemption)
Investment Property: Rental property or investment real estate
Second Home: Vacation home or secondary residence
State
What to select: The state where the property is located
Why important: State tax rates vary from 0% to 13.3%
Note: Some states have no capital gains tax
Ownership Period
What to enter: How many months you've owned the property
Example: 36 months
Critical: 12+ months = long-term rates, under 12 = ordinary income rates
📈 Understanding Your Results
💰 Capital Gain
This is your total profit from the sale before taxes. Calculated as:
Adjusted Basis = Purchase Price + Improvements + Purchase Costs - Depreciation
🏛️ Total Tax Owed
The combined federal and state taxes on your capital gain, including:
- Federal capital gains tax (0%, 15%, or 20%)
- State capital gains tax (varies by state)
- Net Investment Income Tax (3.8% for high earners)
- Depreciation recapture tax (25% on claimed depreciation)
💵 Net Profit
Your actual profit after all taxes are paid:
This is the amount you can expect to keep from the sale.
📊 Effective Tax Rate
The percentage of your gain that goes to taxes:
Helps you understand the true cost of the sale.
💡 Pro Tips for Better Results
Keep Good Records
Save all receipts for improvements, purchase costs, and selling expenses. These reduce your tax liability.
Timing Matters
Hold properties for over 12 months to qualify for long-term capital gains rates (much lower than ordinary income).
Primary Residence Exemption
Live in your property as your primary residence for 2 of the last 5 years to qualify for the $250K/$500K exemption.
1031 Exchanges
Consider like-kind exchanges for investment properties to defer taxes indefinitely.
Professional Advice
Always consult with a tax professional for complex situations or high-value transactions.
State Considerations
Some states have no capital gains tax. Consider where you're a tax resident when selling.
🎯 Common Scenarios
🏡 Selling Your Primary Home
- Set property type to "Primary Residence"
- Include all home improvements in cost basis
- You may qualify for $250K/$500K exemption
- No depreciation to enter
🏢 Selling Rental Property
- Set property type to "Investment Property"
- Include depreciation claimed on tax returns
- Depreciation recapture taxed at 25%
- May be subject to NIIT (3.8%)
🏖️ Selling Vacation Home
- Set property type to "Second Home"
- No primary residence exemption
- Full capital gains tax applies
- Consider timing of sale for tax planning
Ready to Calculate Your Capital Gains?
Use our free calculator with these instructions
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