Capital gains tax on rental property calculator
What selling investment real estate without a 1031 exchange would cost you in 2026: federal capital gains tax, the 25% rate on depreciation, the 3.8% net investment income tax and your state's tax. Switch to exchange mode to see the tax on any boot.
An estimate, not tax advice. It assumes you held the property more than a year, uses taxable income in place of modified AGI for the NIIT, ignores the alternative minimum tax, local income taxes and any losses you could offset, and applies one state rate to the whole gain. Your CPA can tell you what you'd actually owe.
The worked example
A married couple bought a rental for $600,000, put $50,000 into a new roof and HVAC, and took $180,000 of depreciation. They sell in 2026 for $1,200,000 and pay $72,000 to sell. Their other taxable income is $150,000.
Their adjusted basis is $600,000 + $50,000 − $180,000 = $470,000. The gain is $1,128,000 − $470,000 = $658,000. Of that, $180,000 is unrecaptured section 1250 gain, taxed at their ordinary rates but never above 25%, which comes to $41,972. The other $478,000 is long-term capital gain, stacked on top: $283,700 falls in the 15% band and $194,300 above the 2026 joint threshold of $613,700, at 20%, for $81,415. The 3.8% NIIT adds $21,204. Federal tax alone is $144,591 before any state tax, on a sale that leaves $728,000 of equity after the $400,000 loan.
An exchange defers that $144,591. The $658,000 of gain carries into the replacement's basis and is taxed when you sell it without exchanging.
Where each rate comes from
| Piece of the gain | Rate | Source |
|---|---|---|
| Depreciation on personal property (cost segregation, bonus) | Ordinary rates, 10% to 37% | IRC 1245; brackets from Rev. Proc. 2025-32, sec. 4.01 (2026) and Rev. Proc. 2024-40, sec. 2.01 (2025) |
| Depreciation on the building (unrecaptured section 1250 gain) | Ordinary rates, capped at 25% | IRC 1(h)(1)(E), 1(h)(6) |
| Everything else, held over a year | 0%, 15% or 20% | Rev. Proc. 2025-32, sec. 4.03 (2026); Rev. Proc. 2024-40, sec. 2.03 (2025) |
| Net investment income tax | 3.8% of the smaller of the gain or MAGI over $200,000 single, $250,000 joint, $125,000 separate | IRC 1411; thresholds are not indexed for inflation |
| State | See the state table below | Linked for each state in that table |
The 2026 capital gains brackets
The 0%, 15% and 20% rates apply by taxable income, with the gain counted on top of your other income.
| Filing status | 0% up to | 15% up to | 20% above |
|---|---|---|---|
| Single | $49,450 | $545,500 | $545,500 |
| Married filing jointly | $98,900 | $613,700 | $613,700 |
| Married filing separately | $49,450 | $306,850 | $306,850 |
| Head of household | $66,200 | $579,600 | $579,600 |
| Trust or estate | $3,300 | $16,250 | $16,250 |
How boot is taxed in an exchange
In exchange mode the calculator works out two kinds of boot. Cash boot is sale money you don't reinvest. Mortgage boot is debt relief: the loan paid off at the sale minus the loan on the replacement and any cash you add. Under Reg. 1.1031(d)-2, new debt and added cash offset the old debt, but taking on more debt never offsets cash you keep.
You're taxed on the smaller of your gain or your boot. The calculator treats recognized gain as unrecaptured section 1250 gain first, up to your depreciation. That follows from how sections 1(h)(6) and 1250 define the 25% gain, but the IRS worksheets don't spell it out for exchanges, so your preparer may characterize it differently. Cost-segregated personal property is left out of exchange mode because its recapture depends on what personal property you acquire (IRC 1245(b)(4)).
State rates used
Rates are from each state's revenue department, legislature or forms, for the tax year shown in brackets (read October 2026). Most states tax capital gains as ordinary income. The calculator applies the rate a large gain mostly falls into, after any capital gains exclusion the state gives, to the whole gain. If your gain is small, your real state rate may be lower.
| State | Rate applied | How it treats the gain |
|---|---|---|
| Alabama | 5.00% | Taxed as ordinary income at the top rate. (2026) |
| Alaska | 0.00% | No income tax on capital gains. (2026) |
| Arizona | 1.88% | 25% of long-term gain subtracted for assets bought after 2011, applied here. (2025) |
| Arkansas | 1.85% | Half of long-term gain is excluded; gain over $10 million is exempt. (2026) |
| California | 12.30% | Taxed as ordinary income. An extra 1% applies to taxable income over $1 million, not included here. (2025) |
| Colorado | 4.40% | Taxed as ordinary income at the top rate. (2025) |
| Connecticut | 6.99% | Taxed as ordinary income at the top rate. (2026) |
| Delaware | 6.60% | Taxed as ordinary income at the top rate. (2026) |
| District of Columbia | 10.75% | Taxed as ordinary income at the top rate. (2026) |
| Florida | 0.00% | No income tax on capital gains. (2026) |
| Georgia | 4.99% | Taxed as ordinary income at the top rate. (2026) |
| Hawaii | 7.25% | Long-term gain taxed at a 7.25% maximum rate. (2026) |
| Idaho | 2.12% | 60% deducted for Idaho real property held 12 months or more, applied here; otherwise 5.3%. (2026) |
| Illinois | 4.95% | Taxed as ordinary income at the top rate. (2026) |
| Indiana | 2.95% | Taxed as ordinary income at the top rate. (2026) |
| Iowa | 3.80% | Taxed as ordinary income at the top rate. (2026) |
| Kansas | 5.58% | Taxed as ordinary income at the top rate. (2026) |
| Kentucky | 3.50% | Taxed as ordinary income at the top rate. (2026) |
| Louisiana | 3.00% | Taxed as ordinary income at the top rate. (2026) |
| Maine | 7.15% | Taxed as ordinary income. A 2% surcharge on income over $1 million ($1.5 million joint) starts in 2026, not included here. (2026) |
| Maryland | 8.50% | Top rate plus a 2% tax on net capital gain when federal AGI is over $350,000. (2026) |
| Massachusetts | 5.00% | Long-term gain taxed at 5%. A 4% surtax on income over $1,107,750 is not included here. (2026) |
| Michigan | 4.25% | Taxed as ordinary income at the top rate. (2026) |
| Minnesota | 9.85% | Taxed as ordinary income. A separate 1% tax on net investment income over $1 million is not included here. (2026) |
| Mississippi | 4.00% | Taxed as ordinary income at the top rate. (2026) |
| Missouri | 0.00% | Individuals subtract 100% of federal capital gain starting in 2025. Whether that covers depreciation recapture is unconfirmed. (2026) |
| Montana | 4.10% | Separate capital gains rates of 3.0% and 4.1%; the 4.1% rate applied. (2026) |
| Nebraska | 4.55% | Taxed as ordinary income at the top rate. (2026) |
| Nevada | 0.00% | No income tax on capital gains. (2026) |
| New Hampshire | 0.00% | No tax on capital gains. (2026) |
| New Jersey | 10.75% | Taxed as ordinary income at the top rate. (2026) |
| New Mexico | 5.90% | Deduction of the greater of $2,500 or 40%; the 40% applies only to a business sale, so a rental gets the $2,500 floor. (2026) |
| New York | 10.90% | Taxed as ordinary income at the top rate. (2025) |
| North Carolina | 3.99% | Taxed as ordinary income at the top rate. (2026) |
| North Dakota | 1.50% | 40% of long-term gain excluded. (2026) |
| Ohio | 2.75% | 2.75% on nonbusiness income; business income is taxed at 3%. (2026) |
| Oklahoma | 4.50% | Full deduction only for Oklahoma property held 5+ years; otherwise taxed at 4.5%. (2026) |
| Oregon | 9.90% | Taxed as ordinary income at the top rate. (2026) |
| Pennsylvania | 3.07% | Taxed at 3.07%. Pennsylvania has followed federal 1031 deferral since 2023. (2026) |
| Rhode Island | 5.99% | Taxed as ordinary income at the top rate. (2026) |
| South Carolina | 2.92% | 44% of net capital gain deducted. (2026) |
| South Dakota | 0.00% | No income tax on capital gains. (2026) |
| Tennessee | 0.00% | No tax on capital gains. (2026) |
| Texas | 0.00% | No income tax on capital gains. (2026) |
| Utah | 4.45% | Taxed as ordinary income at the top rate. (2026) |
| Vermont | 5.25% | 40% of gain on non-owner-occupied rentals held over 3 years excluded, capped at $350,000; depreciation does not qualify. (2025) |
| Virginia | 5.75% | Taxed as ordinary income at the top rate. (2026) |
| Washington | 0.00% | Washington’s capital gains excise tax exempts real estate. (2025) |
| West Virginia | 4.58% | Taxed as ordinary income at the top rate. (2026) |
| Wisconsin | 5.36% | 30% of long-term gain excluded. (2025) |
| Wyoming | 0.00% | No income tax on capital gains. (2026) |
Questions people ask
What is the capital gains tax rate on rental property in 2026?
Long-term gain is taxed at 0%, 15% or 20% depending on your taxable income; for a married couple filing jointly, 20% starts above $613,700. The part of the gain that equals your depreciation is taxed at your ordinary rate up to 25%. If your modified AGI is over $250,000 joint ($200,000 single), add the 3.8% net investment income tax, plus state tax.
How do I calculate my gain on a rental property?
Start with the sale price and subtract selling costs. Then subtract your adjusted basis: what you paid, plus capital improvements, minus all the depreciation you took or were entitled to take. What remains is the gain.
If I never claimed depreciation, do I still pay recapture?
Yes. Basis is reduced by depreciation that was allowed or allowable, so the IRS treats you as if you took it. Unclaimed depreciation can often be caught up with Form 3115 before the sale; ask your preparer.
What is boot in a 1031 exchange?
Anything you receive that isn’t like-kind property: cash you keep, or debt relief when your new loan is smaller than the old one and you don’t add cash to make up the difference. Gain is taxed up to the amount of boot. Switch the calculator to exchange mode to see it.
Buying the replacement with a loan?
Janover Capital, which runs this site, arranges commercial financing for 1031 replacement properties. Ask about yours, or send a question about the numbers.