Capital Gains Tax Calculator
What Are Capital Gains Taxes?
When you sell an asset worth more than you bought it for, your profit is called capital gains. Assets can be real estate, stocks, bonds, cryptocurrency, cars, boats, artwork–any kind of investment. Capital losses are assets that you sell for less than you purchased them for.
Capital gains taxes are the taxes that state and federal governments levy on the money you make from selling appreciated assets. Capital gains taxes are progressive, meaning that the rate you pay depends on the amount of money you make. You will pay more taxes if you are in a higher income bracket. The government also considers how long you have held the asset, your filing status, what you sold, and whether you have any capital losses.
Capital Gains Tax Calculator
Here is what you need to consider when calculating your capital gains taxes:
Adjusted Net Basis
The basis is the amount you originally paid for your asset. To use a real estate capital gains tax calculator, you must first find your adjusted basis, which is the original purchase price plus improvements minus depreciation.
If you bought a home for $500,000, spent $40,000 on renovations during your ownership, and the depreciation was assessed at $20,000, your adjusted cost basis would be $520,000 ($500,000 + $40,000 – $20,000).
Calculate Capital Gains
Once you know your net adjusted basis, you can calculate your capital gains. To do that, you take your sale price minus the net adjusted basis.
If you sold the property mentioned above for $1.5 million, your capital gains would be $1.5 million minus the net basis of $520,000. Therefore, your capital gains would be $800,000.
Short-Term vs. Long-Term
To calculate your capital gains tax, you’ll first need to know if the short-term or long-term rate will apply. If you have held your asset for less than one year, it will be taxed at the short-term capital gain rate, which is the same as your income tax rate. If you have held the asset for over a year, you will be taxed at the long-term capital gain rates of 0%, 15%, or 20%, depending on your income bracket, however, please note that your income in the year of sale will be determined partly by what you sell. For example, if your income is typically $200,000, then this year you sell your business for $1,000,000, then your income for this year will be $1,200,000 and therefore you will be in the highest bracket.
Short Term Income Tax Bracket
What you sell in a given year will be added to your ordinary income for the year and taxed at the appropriate rate.
Therefore, if the capital gains from the sale of your property were $800,000, but you only owned it for 11 months, the $800,000 would be added to your taxable income for the year. That would put you in the highest tax bracket, meaning you would owe 37% in federal taxes. On your $800,000 gain, that would mean $296,000 in taxes.
There are seven income tax brackets for 2024. Below are the rates based on income and filing status. To use any capital gains tax calculator, you will need to input your income for the year.
| Tax rate | Single | Married filing jointly | Married filing separately | Head of household |
| 10% | $0 to $11,600 | $0 to $23,200 | $0 to $11,600 | $0 to $16,550 |
| 12% | $11,601 to $47,150 | $23,201 to $94,300 | $11,601 to $47,150 | $16,551 to $63,100 |
| 22% | $47,151 to $100,525 | $94,301 to $201,050 | $47,151 to $100,525 | $63,101 to $100,500 |
| 24% | $100,526 to $191,950 | $201,051 to $383,900 | $100,526 to $191,950 | $100,501 to $191,950 |
| 32% | $191,951 to $243,725 | $383,901 to $487,450 | $191,951 to $243,725 | $191,951 to $243,700 |
| 35% | $243,726 to $609,350 | $487,451 to $731,200 | $243,726 to $365,600 | $243,701 to $609,350 |
| 37% | $609,351 or more | $731,201 or more | $365,601 or more | $609,350 or more |
Long-Term Capital Gain Rates
There are only three federal tax brackets for long-term capital gains. The income bracket is based on your ordinary income for the year, not including your long-term capital gains. Below are the income brackets and rates for 2024.
| Fling status | 0% | 15% | 20% |
| Single | $0 to $47,025 | $47,026 to $518,900 | $518,901 or more |
| Married filing jointly | $0 to $94,050 | $94,051 to $583,750 | $583,751 or more |
| Married filing separately | $0 to $47,025 | $47,026 to $291,850 | $291,851 or more |
| Head of household | $0 to $63,000 | $63,001 to $551,350 | $551,351 or more |
If your ordinary income is $600,000 a year, and you made $800,000 selling your real estate investment, you would owe 20% in capital gains taxes or $160,000.
State Taxes
In addition to federal taxes, most states levy an additional capital gains tax, and rates vary widely by state. To use a capital gains tax calculator, you will need to identify your state of residency. State taxes are also progressive, meaning that they vary based on income. Here are the capital gains tax rates by state for the highest earners in 2024. The states are in order of highest to lowest capital gains taxes.
| California | 13.3% |
| New York | 10.9% |
| New Jersey | 10.75% |
| Washington D.C. | 10.75% |
| Oregon | 9.9% |
| Minnesota | 9.85% |
| Massachusetts | 9.0% |
| Vermont | 8.75% |
| Wisconsin | 7.65% |
| Hawaii | 7.25% |
| Maine | 7.15% |
| Washington | 7.0% |
| Connecticut | 6.99% |
| Delaware | 6.6% |
| South Carolina | 6.4% |
| Rhode Island | 5.99% |
| Montana | 5.9% |
| New Mexico | 5.9% |
| Nebraska | 5.84% |
| Idaho | 5.8% |
| Maryland | 5.75% |
| Virginia | 5.75% |
| Iowa | 5.7% |
| Kansas | 5.7% |
| Georgia | 5.49% |
| West Virginia | 5.12% |
| Alabama | 5.0% |
| Illinois | 4.95% |
| Missouri | 4.8% |
| Oklahoma | 4.75% |
| Mississippi | 4.7% |
| Utah | 4.65% |
| North Carolina | 4.5% |
| Arkansas | 4.4% |
| Colorado | 4.4% |
| Louisiana | 4.25% |
| Michigan | 4.25% |
| Kentucky | 4.0% |
| Ohio | 3.5% |
| Pennsylvania | 3.07% |
| Indiana | 3.05% |
| Arizona | 2.5% |
| North Dakota | 2.5% |
States With No Capital Gains Taxes
The following states don’t have any capital gains taxes:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Wyoming
Capital Gains Tax Calculator on the Sale of Property
Let’s put it all together using a fictional example of Mr. and Mrs. Jones, who live in California and are tired of managing rental properties. They want to trade late-night maintenance calls and cleaning toilets for cruises and more time with the grandkids in retirement. They are selling a small rental complex they bought 20 years ago for $600,000.
Over the past 20 years, they have invested $200,000 in repairs and renovations. The property has depreciated by $100,000. They are in a hot real estate market and can sell the complex for $6 million.
The net adjusted cost basis is $600,000 + $200,000 – $100,000, or $700,000. They sell it for $6 million, meaning their capital gains are $5.3 million. Their rental property has done well, putting them in the highest income tax bracket.
Since this is a long-term investment, and they are in the highest tax bracket, their federal capital gains tax is 20%, and their California state capital gains tax is 13.3%. They owe 33.3% in capital gains taxes upon the sale of their rental property, which comes to $1.76 million in taxes.
This doesn’t include the possibility of the Net Investment Income Tax. The Net Investment Income Tax (NIIT) was initiated in 2013 and applies to the net investment income of individuals, trusts, or estates with income over a certain threshold. It is a flat rate of 3.8%. In 2024, the income thresholds were:
|
Married, filing jointly |
$250,000 |
|
Head of household |
$200,000 |
|
Married, filing separately |
$125,000 |
The NIIT tax applies to Mr. and Mrs. Jones and amounts to roughly $200,000 on the sale of their rental property. This means that they have $3.34 million left to invest for their retirement.
Using a Deferred Sales Trust to Defer Capital Gains
Another option for Mr. and Mrs. Jones to maximize their capital gains returns is to use a Deferred Sales Trust. This would allow them to defer their capital gains, maximize their investments, and spread their capital gains tax payments out over time. Here’s how it works:
Instead of selling their rental property directly to a buyer, Mr. and Mrs. Jones sell it to a Deferred Sales Trust, which gives them a promissory note in exchange. The trust sells to the buyer and takes possession of the profits. Because Mr. and Mrs. Jones have not received any proceeds from the sale, they do not owe any capital gains taxes in the year of sale. Instead of having $3.34 million to invest in their retirement, they are free to invest all $5.3 million of their capital gains. You don’t need a calculator to determine the tax owed on the sale of their rental property, as it would be zero.
According to the terms of the promissory note, which Mr. and Mrs. Jones determined in conjunction Capital Gains Tax Solutions (Trustee Deferred Sales Trust), the profits are reinvested into a diverse portfolio of investments. Mr. and Mrs. Jones can choose to have the trust only pay them the interest earned on their investments, meaning that they will pay income tax on those proceeds, but their capital gains taxes would be in a 100% deferral state, for DST 1.0 version.
If Mr. and Mrs. Jones need more liquidity, they can set up the promissory note so that the trust pays them the proceeds from their sale in regular installments. They might decide they want to receive $100,000 quarterly. They would pay capital gains taxes on the $400,000 they receive each year while the rest of their profits continue to earn them money in investments. Better yet, Mr. and Mrs. Jones could choose to structure the payments as interest-only installments, where only ordinary income would be owed on the payments received, for DST 1.0 version. There is a DST 2.0 version that has different rules for payout. Please set a time with Capital Gains Tax Solutions to determine if DST 1.0 or DST 2.0 is more suitable fit.
Deferred Sales Trust Specialists
This page gave you a rough estimate of how to calculate your capital gains taxes on your investments. Still, if you want to sell highly appreciated assets, you should meet with Capital Gains Tax Solutions. The nitty-gritty of taxes gets complicated, and you want to ensure that you follow the law and get the most out of your investments.
Here at Capital Gains Tax Solutions, we can offer you more than a capital gains tax calculator; we can offer you the opportunity to defer your taxes, maximize your gains, and transform your wealth. Contact us today to learn how a Deferred Sales Trust can work for you. We promise to give you a really good look at what we do and how we might be able to help you. If you like it and feel like it fits, then go ahead and make a decision and move forward, and let’s get started today. But we want to let you know that if you don’t like it, that’s completely okay too. We promise we won’t talk you into anything as our only goal is to help you figure out what is best for you. Our only request is that you just let us know clearly one way or the other.