Rental property capital gains tax calculator: federal and California

How the capital gains calculator figures your gain

The gain is the sale price, less selling costs, less your adjusted basis. Adjusted basis is what you paid (plus buying costs you didn't deduct), plus capital improvements, minus depreciation. Improvements are things that add value or extend the life of the house, such as a roof, an HVAC system or an addition; repairs you deducted against rent don't count.

Once the gain is known, the calculator splits it. The slice equal to your depreciation is unrecaptured section 1250 gain. Everything above it is ordinary long-term capital gain, assuming you owned the house more than a year. If the price barely covers your basis, the whole gain can be depreciation; if you sell below basis, there's no tax and the Form 593 withholding comes back. For what goes into the selling costs line, see what it costs to sell a Sacramento rental.

Depreciation in the capital gains calculator: enter it or estimate it

If you have your depreciation schedules (Form 4562 or your CPA's asset report), choose "I'll enter the amount" and type the total taken on the house and improvements. That's the best number.

If you don't, the estimate takes the building share of the purchase price, divides by 27.5 years (the straight-line period IRS Publication 527 sets for residential rentals) and multiplies by the years rented. It skips the mid-month convention and improvement depreciation, so treat it as a ballpark. The land share is your call: your property tax bill splits land and improvements, and 75% building is only a default.

The catch most owners miss: IRS Publication 551 reduces your basis by depreciation you could have taken even if you never claimed it ("allowed or allowable"). Skipping depreciation doesn't shrink the tax on the sale. The depreciation recapture guide covers that trap and how a CPA can catch up on missed deductions before you sell.

Federal capital gains rates the calculator uses for 2026

The federal numbers come from IRS Rev. Proc. 2025-32, the inflation adjustments for tax years beginning in 2026. The gain is stacked on top of your other taxable income, so the same sale costs more in a high-income year.

The depreciation slice follows the Schedule D Tax Worksheet in the IRS instructions: it's taxed at your ordinary rates up to the top of the 24% bracket and at 25% above that, which is why IRS Topic 409 calls 25% a maximum. The rest of the gain fills the 0%, 15% and 20% bands above it. The worksheet then keeps whichever is smaller, that result or regular tax on everything, and so does the calculator.

The 3.8% net investment income tax (IRS Topic 559) applies to the smaller of the gain or the amount your modified AGI goes over the threshold. The calculator estimates MAGI as your other taxable income plus the standard deduction and treats that other income as wages, not investment income. The guide to capital gains on a California rental walks through a full Sacramento return line by line.

California capital gains tax and the Form 593 withholding

California has no capital gains rate. The Franchise Tax Board says all capital gains are taxed as ordinary income, so the calculator runs your gain through the state brackets on top of your other income and adds the 1% Behavioral Health Services Tax on taxable income over $1,000,000 (the FTB's 2026 Form 540-ES instructions use that name; it used to be the Mental Health Services Tax).

The brackets are the FTB's 2025 Tax Rate Schedules X and Y, the latest the FTB has published as of October 2026. California indexes its brackets each year, so a 2026 sale will likely owe slightly less than this shows once the 2026 schedules are out. The calculator also leaves out California exemption credits, which are small next to a five- or six-figure gain.

At closing, escrow normally withholds 3⅓% of the sale price on FTB Form 593 (the form's instructions use .0333). That's a prepayment, not the tax. The calculator compares it with the California figure and shows what's left to pay with your return, or what comes back. The withholding is figured on the price, the tax on the gain, so a house with little gain gets a refund and one with a large gain owes more.

What this capital gains calculator leaves out

It's built for the common case: one rental house, held more than a year, sold outright. These are not in the math:

• Alternative minimum tax. Rare for a sale like this, but not modeled.
• Credits and carryovers. No federal or state credits, capital loss carryovers or suspended passive losses, which can cut the bill a lot on a house that ran at a paper loss.
• Deferral and exclusions. No 1031 exchange, installment sale or section 121 exclusion for a house you once lived in. The 1031 exchange rules for California owners explain the deferral route.
• Appliance and carpet recapture. Section 1245 recapture on personal property is ordinary income; add it to other income if it's material.
• Head of household and separate returns. Only joint and single filers are covered.

This is an estimate, not tax advice. Take the result and your depreciation schedules to a CPA before you price the house.

Reading the capital gains result for a Sacramento rental

Try the depreciation line two ways. With the defaults, switching depreciation to "I'll enter the amount" with $0 drops the estimate from about $63,000 to about $35,600. That difference is what the years of depreciation deductions cost you on the way out, and it's owed whether or not you claimed them.

Then change the other income. Selling in a year when you've retired or had a low-income year can keep more of the depreciation slice in the 12% and 22% brackets and the NIIT at zero. If you can choose which tax year the sale closes in, ask your CPA which year costs less before you set the closing date. If the after-tax number makes you rethink selling at all, the rent vs sell calculator compares keeping the house, and the site's overview of selling a rental in Sacramento covers the rest of the decision.

Capital gains tax calculator: questions rental owners ask

Sources

• IRS Rev. Proc. 2025-32: 2026 tax rate tables, capital gains rate amounts, standard deduction
• IRS Instructions for Schedule D (Form 1040): Schedule D Tax Worksheet
• IRS Topic 409: Capital gains and losses (25% maximum on unrecaptured section 1250 gain)
• IRS Topic 559: Net investment income tax
• IRS Publication 527: Residential rental property (27.5-year recovery)
• IRS Publication 551: Basis of assets (depreciation you could have deducted)
• FTB: Capital gains and losses
• FTB: 2025 California tax rate schedules
• FTB: 2026 Form 540-ES instructions (Behavioral Health Services Tax)
• FTB: 2026 Form 593 instructions, real estate withholding