Rental property tax tools

Should I sell my rental — and what would I actually keep?

Selling a rental triggers a stack of taxes most owners never see coming: depreciation recapture, capital gains, the 3.8% net investment income tax, and your state's cut. This free calculator runs the real IRS worksheet and shows the after-tax check you'd walk away with — line by line, for any year you might sell.

100% free Nothing leaves your browser Built on the actual Schedule D worksheet
Run your numbers

Your after-tax sale, calculated

Property & sale
Value today (2026)
$
Appreciation
%
annual, to sale year
Sale year
Selling costs
%
agent, transfer tax, closing
Mortgage
Original loan (most recent refi)
$
Interest rate
%
Start date
when this loan/refi began
Term
yrs
30 or 15 fixed
Basis & depreciation
Purchase price
$
Capital improvements
$
upgrades that add to basis
Depreciation taken to date
$
from your returns (Form 4562)
Annual depreciation
$
added each year until sale
Taxes & income
Filing status
Other income in sale year (AGI, before the sale)
$
pensions, wages, interest — everything except this sale
State (where the property sits)
Rate on gain
%
pre-filled — edit if needed

Inflation (indexes tax brackets to sale year)
%
The recapture trap
The IRS recaptures depreciation you were allowed to take — whether or not you actually took it. Skipping depreciation doesn't dodge the tax at sale; it just wastes the annual deduction. If you haven't been claiming it, talk to a CPA about catching up (Form 3115) before you sell.
Your estimated after-tax check
—
Total tax on sale
—
Effective tax on gain
—
Recapture share of tax
—

Where the sale price goes

Your check Mortgage payoff Taxes Selling costs

The sale, line by line

Federal tax detail — how the gain is actually taxed

Schedule D Tax Worksheet stacking

How this is calculated

Basis & gain: adjusted basis = purchase price + capital improvements − accumulated depreciation (depreciation to date plus your annual amount for each full year until the sale). Gain = sale price − selling costs − adjusted basis, split into unrecaptured §1250 gain (up to the depreciation taken) and long-term capital gain (the appreciation above your original basis).

Federal tax: computed with the actual Schedule D Tax Worksheet stacking — your other income fills the ordinary brackets, recapture stacks next (taxed at ordinary rates in the lower-bracket zone, then at the 25% ceiling), and the appreciation gain stacks on top at the 0/15/20% capital-gains breakpoints. The result is capped at what you'd owe if everything were ordinary income. Brackets, the standard deduction, and the capital-gains breakpoints are 2025 figures indexed to your sale year by the inflation you set; the NIIT threshold is fixed by statute and never indexed.

NIIT: 3.8% on the smaller of the gain or the amount your income (including the gain) exceeds the threshold ($250k married-joint / $200k single).

State: pick the state where the property sits; the rate on the gain is pre-filled with a 2026 effective estimate — including special treatments like Washington's real-estate exemption from its capital-gains tax, Missouri's capital-gains exemption, partial exclusions (AZ, AR, NM, ND, SC, VT, WI), Montana's reduced gain rates, and Hawaii's alternative rate — and stays fully editable. For progressive states the pre-fill is the bracket a large gain typically lands in. Local income taxes (Maryland counties, New York City) aren't included. Your resident state generally taxes the gain too but credits tax paid to the property's state. A few states (e.g., MD, GA) withhold at closing for nonresident sellers; Virginia generally doesn't — confirm with your closing attorney.

Simplifications, on purpose: whole-year depreciation (no mid-month convention in the sale year); all depreciation treated as §1250 building depreciation (5-year property like appliances technically recaptures at full ordinary rates — usually a small difference); no §121 exclusion (assumes you fail the 2-of-5-year residence test); suspended passive losses, 1031 exchanges, and AMT not modeled; state tax computed as a flat rate on the gain.

This is a planning estimate, not tax advice. Recapture, NIIT, state credits, and withholding rules have edge cases and change over time — verify the numbers with a CPA before acting on a sale.

Depreciation recapture: the tax that blindsides rental owners

Most owners budget for capital gains when they sell. Almost nobody budgets for depreciation recapture — and it's often the single biggest line on the tax bill.

Every year you rent a property, you deduct depreciation, which lowers your taxable income while you hold it. When you sell, the IRS wants that benefit back: the total depreciation you took is "recaptured" and taxed as unrecaptured Section 1250 gain — at your ordinary income rate, up to a 25% ceiling — separately from the appreciation.

Here's the part that stings: the IRS recaptures the depreciation you were allowed to take, whether or not you actually claimed it. Skipping depreciation doesn't dodge the tax — it just wastes the yearly deduction and leaves you with the same bill at the end. If you haven't been depreciating your rental, that's worth a conversation with a CPA (often a Form 3115 catch-up) before you sell.

And it compounds: every year you hold the property, the accumulated depreciation grows, so the recapture bill waiting at the finish line grows too. The calculator above shows exactly how big that piece is for any sale year — try changing the year and watch the recapture line move.

How the gain on a rental sale is actually taxed

Your taxable gain is the net sale price (after selling costs) minus your adjusted basis — what you paid, plus capital improvements, minus all the depreciation you've taken. That gain then gets taxed in as many as four separate ways:

up to 25%Depreciation recapture. The depreciation portion, taxed at ordinary rates but capped at 25%.
0 / 15 / 20%Long-term capital gains. The appreciation above your original basis, at the rate set by your total income.
+ 3.8%Net investment income tax. Stacks on the gain once your income clears $250k (married-joint) or $200k (single).
+ stateState income tax. The state where the property sits taxes the gain; your home state usually credits it.

The calculator runs the actual IRS Schedule D Tax Worksheet stacking rather than a flat guess — your ordinary income fills the brackets first, recapture and capital gains stack on top, and the result is capped at what you'd owe if it were all ordinary income. That's why the "federal tax detail" panel shows each slice at its real rate.

Keep it or sell it? That comparison is coming next.

The after-tax check is only half the decision. The real question is whether selling and investing the proceeds beats keeping the rental for its cash flow, appreciation, mortgage paydown, and yearly depreciation shelter — against a recapture bill that grows every year you wait. We're building that keep-vs-sell comparison now. Leave your email and we'll tell you the moment it's live.

No spam, no sharing your address. One email when it's ready.

Rental sale tax questions, answered

What is depreciation recapture when you sell a rental?

When you sell, the depreciation you deducted over the years is "recaptured" and taxed as unrecaptured Section 1250 gain — at your ordinary rate up to a 25% ceiling — separately from the appreciation, which is taxed at long-term capital gains rates.

Do I owe recapture if I never claimed depreciation?

Yes. The IRS recaptures depreciation you were allowed to take, whether or not you actually claimed it. Skipping depreciation doesn't avoid the tax at sale; it only wastes the annual deduction. A CPA may be able to help you catch up with Form 3115 before you sell.

How is the profit on a rental property sale taxed?

The gain splits into two parts: depreciation recapture (ordinary rates, capped at 25%) and long-term capital gain on the appreciation (0%, 15%, or 20% depending on income). The 3.8% net investment income tax and state income tax can apply on top, and selling costs reduce the gain.

What is the Net Investment Income Tax on a rental sale?

The NIIT is an extra 3.8% tax on investment income, including a rental sale gain, for taxpayers whose modified adjusted gross income exceeds $250,000 (married filing jointly) or $200,000 (single). Only the portion above the threshold is taxed — and a large sale can push you over the line in the year you sell.

Should I sell my rental or keep renting it?

It depends on how the after-tax proceeds you could invest compare with keeping the property for its rent, appreciation, mortgage paydown, and depreciation shelter — weighed against a recapture bill that grows every year you hold. This calculator shows the sell-side after-tax check; a full keep-vs-sell comparison is in development (join the list above).

Is this calculator tax advice?

No. It's a planning estimate to help you understand your situation before you talk to a professional. Recapture, NIIT, state credits, 1031 exchanges, and passive-loss rules have edge cases and change over time — confirm the numbers with a CPA before acting. Your inputs stay in your browser; nothing is sent to a server.

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