Rental Property Sale Tax Calculator

A rental-property sale can involve ordinary section 1231 look-back treatment, unrecaptured section 1250 gain, regular capital gain and NIIT. Adjusted basis generally reflects depreciation allowed or allowable, not only deductions actually claimed. Missing a depreciation deduction does not automatically preserve basis.

This model estimates one entered sale and an entered five-year look-back amount. It does not compute depreciation schedules, coordinate multiple business-property sales, allocate every mixed asset, or determine currently deductible losses. Those records and restrictions need a separate review.

The estimate separates modeled ordinary look-back tax, unrecaptured section 1250 tax, regular capital-gain tax and NIIT. Compare the breakdown with your depreciation and prior-year loss records before using it.

A reported economic loss is not an approved deduction. A fully taxable disposition to an unrelated buyer can affect suspended passive losses, while at-risk, business-loss and other rules can still matter. Real-estate-professional status does not create an unlimited deduction by itself. Use the applicable forms or professional help for the full-year result.

Use adjusted-basis records, Form 4797, Schedule D and their applicable worksheets:

1. Gain equals net sale proceeds less adjusted basis. Basis generally includes eligible acquisition and improvement costs and reductions for depreciation allowed or allowable.

2. Section 1231 look-back can recharacterize a net gain as ordinary income to the extent of applicable nonrecaptured net section 1231 losses from the preceding five tax years. This model treats the entered sale as the only current section 1231 transaction.

3. Remaining long-term gain can include an unrecaptured section 1250 portion, generally subject to ordinary rates capped at 25%, and regular gain subject to the applicable preferential bands. A 25% maximum is not a flat tax on every depreciation dollar.

4. Holding period and NIIT affect the result. The usual long-term model requires more than one year. Nonpassive trade-or-business treatment and real-estate-professional status require a fact-specific analysis; status alone is not proof that every gain avoids NIIT.

5. A loss is shown before a final deductibility determination. At-risk rules, passive-activity rules, suspended losses, disposition conditions and other limitations can change the usable amount.

The calculator does not compute depreciation or replace the return worksheets. Section 1245 assets, accelerated-depreciation recapture, exchanges and complex allocations need separate treatment.

Optional 1031 gain worksheet

The separate worksheet illustrates Form 8824 lines 15 through 25 for a qualifying U.S. real-property exchange without ordinary recapture. It verifies that property values, cash and assumed liabilities balance. Cash received is not offset by additional borrowing; eligible exchange expenses reduce boot first, with remaining expenses added to basis. Recognized gain is limited to realized gain and net boot. Losses are deferred, not currently deducted. Replacement basis equals replacement fair market value less deferred gain (or plus deferred loss). These are gain and basis amounts, not estimated tax savings.

This illustration does not establish eligibility or model personal-residence exclusions, related parties, dealer property, non-like-kind assets, cost segregation, ordinary recapture, installment terms, state tax, or mixed-asset netting. The rental tax estimate above remains a taxable-sale calculation and does not incorporate this worksheet. Identification and receipt deadlines use calendar days, with receipt limited by the earlier of 180 days or the applicable return deadline including an obtained extension. Special relief and reverse exchanges are excluded. Export the separate CSV to retain these assumptions.