Capital Gains Tax Calculator 2025
Calculate your capital gains tax on real estate sales for all 50 states. This comprehensive calculator includes federal capital gains tax, state tax, Net Investment Income Tax (NIIT), and depreciation recapture for investment properties. Updated for 2025 tax rates.
How Capital Gains Tax Works
When you sell real estate for more than you paid, you realize a capital gain. This gain is subject to federal and state taxes, calculated based on several factors including how long you owned the property, your income, and where the property is located.
Components of Your Tax Bill
1. Federal Long-Term Capital Gains Tax (0%, 15%, or 20%)
For properties held longer than one year, you'll pay long-term capital gains tax at rates of 0%, 15%, or 20% depending on your taxable income. Higher earners pay higher rates.
2. Depreciation Recapture Tax (25%)
If you claimed depreciation on an investment property, the IRS "recaptures" that depreciation at a 25% tax rate when you sell. This only applies to investment properties, not primary residences.
3. Net Investment Income Tax - NIIT (3.8%)
This Medicare surtax applies if your Modified Adjusted Gross Income exceeds $200,000 (single) or $250,000 (married filing jointly). It's calculated on your net investment income, including capital gains.
4. State Capital Gains Tax (0% to 13.3%)
Most states tax capital gains as ordinary income. Rates vary widely: nine states have no income tax, while California's top rate is 13.3%. Our calculator includes accurate rates for all 50 states plus DC.
States with No Capital Gains Tax
Nine states don't tax capital gains because they have no state income tax. If your property is located in one of these states, you'll only owe federal taxes:
*Missouri offers a 100% deduction for individual capital gains, effective 2025
Highest State Capital Gains Tax Rates
| State | Rate | Combined Max Rate* |
|---|---|---|
| California | 13.3% | 37.1% |
| New York | 10.9% | 34.7% |
| New Jersey / DC | 10.75% | 34.55% |
| Oregon | 9.9% | 33.7% |
| Minnesota | 9.85% | 33.65% |
*Combined rate = Federal (20%) + State + NIIT (3.8%)
Primary Residence Exclusion (Section 121)
If you're selling your primary residence, you may qualify for a significant tax exclusion under IRC Section 121:
Exclusion Amounts:
- $250,000 for single filers
- $500,000 for married couples filing jointly
Requirements to Qualify:
- Ownership Test: You must have owned the home for at least 2 years
- Use Test: You must have lived in the home as your primary residence for at least 2 of the last 5 years before the sale
- Frequency Test: You haven't claimed this exclusion on another home sale in the past 2 years
The 2-year periods don't have to be continuous. You just need to accumulate 24 months (730 days) of ownership and use during the 5-year period ending on the sale date.
Defer Taxes with a 1031 Exchange
For investment properties, a 1031 exchange (also called a like-kind exchange) allows you to defer 100% of your capital gains taxes by reinvesting the proceeds into another investment property or a Delaware Statutory Trust (DST).
Key Benefits:
- Defer All Taxes: Federal capital gains, depreciation recapture, NIIT, and state taxes—all deferred
- Full Reinvestment: Keep 100% of your equity working for you instead of paying 30-40% to taxes
- Unlimited Exchanges: Continue exchanging indefinitely ("swap 'til you drop" strategy)
- Step-Up Basis at Death: Heirs receive stepped-up basis, eliminating deferred taxes entirely
Frequently Asked Questions
What is the capital gains tax rate on real estate in 2025?
Federal long-term capital gains tax rates for 2025 are 0%, 15%, or 20%, depending on your income. Additionally, you may owe the 3.8% Net Investment Income Tax (NIIT), 25% depreciation recapture tax on investment properties, and state capital gains tax which varies by state from 0% to 13.3%.
How do I calculate capital gains tax on the sale of real estate?
Capital gains = Sale Price - Cost Basis (original purchase price + improvements). The gain is taxed at federal long-term capital gains rates (0%, 15%, or 20%), plus NIIT (3.8% if applicable), depreciation recapture (25% on investment property), and state capital gains tax. Use our calculator above for a detailed breakdown.
Which states have no capital gains tax?
Nine states have no capital gains tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Wyoming, and Missouri (100% deduction effective 2025). These states either have no income tax or fully exclude capital gains from taxation.
Can I avoid capital gains tax on real estate?
Yes, there are several ways: 1) Primary residence exclusion (Section 121) - up to $250,000 for single filers or $500,000 for married couples if you lived in the home 2 of the last 5 years. 2) 1031 Exchange - defer all capital gains taxes by reinvesting in like-kind real estate or a Delaware Statutory Trust (DST). 3) Hold until death for step-up in basis.
What is depreciation recapture tax on real estate?
Depreciation recapture (Section 1250) is a 25% federal tax on the depreciation you claimed on investment property. When you sell, the portion of your gain equal to depreciation claimed is taxed at 25% instead of the lower long-term capital gains rates. This only applies to investment properties, not primary residences.
What is the Net Investment Income Tax (NIIT)?
NIIT is a 3.8% Medicare surtax on investment income, including capital gains from real estate. It applies if your Modified Adjusted Gross Income (MAGI) exceeds $200,000 (single) or $250,000 (married filing jointly). The tax is calculated on the lesser of your net investment income or the amount your MAGI exceeds the threshold.
How much can I save with a 1031 exchange?
A 1031 exchange allows you to defer 100% of capital gains taxes by reinvesting the full sale proceeds into like-kind property or a Delaware Statutory Trust (DST). For example, on a $200,000 capital gain, you could defer $50,000-$80,000+ in combined federal, state, and NIIT taxes, keeping that money working for you instead of paying it to the IRS.