This real estate capital gains calculator should be used to estimate the capital gains tax you may pay if you sell your home or land or any other capital asset. Based on your input, the real estate capital gains calculator computes both short-term capital gains and long-term capital gains tax. Apart from federal income tax, the capital gains calculator also computes the state tax on capital gains.
2022 Real Estate Capital Gains Calculator
The capita gains tax rate for 2022 is applied for computing taxes.
The aforesaid calculator can also be used as capital gains tax calculator on sale of primary residence.
Capital Gains Exclusion u/s 121
The real estate capital gains calculator automatically decides upon the eligibility of exclusion of capital gains under section 121 of the Internal Revenue Code .As you know, you are eligible for the Section 121 exclusion on the following two conditions :
- If you have owned and
- Used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale. You can meet the ownership and use tests during different 2-year periods.
Readers should note that two years conditions can be satisfied within a 5-year period ending on the date of the sale. Generally, you’re not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home. Refer to Publication 523 for the complete eligibility requirements, limitations on the exclusion amount, and exceptions to the two-year rule. Apart from the exemption of long term capital gains u/s 121 , there is an exclusion rule under section 1031, popularaly known as 1031 exchange rule
The property’s sale value is the aggregate of the sales consideration plus certain benefits or receipts that a seller gets.
Sales consideration received xxxxxxx
(i)The fair market value of any other property or services associated with the capital assets xxxxxx
(ii)The value of any notes, mortgages, or other debts that the buyer agreed to assume (take over) as part of the sale xxxxxxx
(iii)Any real estate taxes the buyer paid on your behalf xxxxxx
(iv)Any amount you received for granting an option to buy your home, xxxxxxx
(A) Sale price that should be filling in input field of calculator xxxxxxx
Closing Costs or Selling Expense
The following expenses related to the sold capital asset are considered Closing Costs or selling expense. These are deductible while computing capital gains.
(i)Any sales commissions xxxxx
(ii) Any advertising fees xxxxx
(iii) Any legal fees xxxxx
(iv) Any mortgage or other loan charges you paid that would normally have been the buyer’s responsibility Xxxxx
((iv)Any other fees or costs to sell your home xxxxx
(A) Total Closing Cost (Selling Expense. xxxxx
B. Other Costs related to property
There may be many other costs associated with the property that an owner-seller might have incurred. These are allowed to be reduced from the sales proceedings
(i)Settlement fees or closing costs xxxx
(ii)Real estate taxes or other costs you paid xxxx
(iii) Any amounts you spent on the construction or other improvements xxxx
(iv)Any amounts you spent to repair damage to your home or the land on which it sits xxxx
(v) Any special assessments for local improvements xxxx
(B)Total of Other Costs xxxxx
C. Adjustments to Costs (Basis)
Following adjustments (reduction ) to your other cost must be done. If any of the following benefits have occurred to you, aggregate them and reduce it from Other Cost.
(i)Any casualty losses (such as flood or fire damage) you claimed as a deduction on a federal tax return xxxxx
(ii)Any insurance payments you received or expect to receive for casualty losses xxxxx
(iii)Any payments you received for granting an easement, conservation restriction, or right-of-way xxxxxx
(iv)Any energy credits or subsidies that effectively paid you back and you included in your total basis xxxxx
(v)Any adoption credits you claimed or got under an employer-sponsored adoption assistance program xxxxx
(vi)Any real estate taxes the seller paid on your behalf (and for which you never paid the seller back). xxxxxx
(vii) Any mortgage points the seller paid for you when you bought your home xxxxx
(viii)Any cancelled or forgiven mortgage debt amount that was excluded before January 1, 2018, due to a bankruptcy or insolvency and that you didn’t have to declare as income xxxxxx
(ix) Any sales tax you paid on your home (such as for a mobile home or houseboat) and then claimed as a deduction on a federal tax return xxxxxxx
(x)The value of any temporary housing the builder of your home provided for you xxxxxx
(xi)Any gain you postponed from the sale of a previous home sold before May 7, 1997 xxxxxx
(C) Total of the cost that needs to be adjusted( adjusted basis) xxxxx
Costs after Adjustments = Other costs -adjustment to costs (B-C)
Capital gains tax calculator on sale of rental property must account for depreciation capture because when you rent the property, you reduce the depreciation from the gross rental income while computing tax. IRS imposes depreciation recapture tax if you had claimed depreciation on the property in the past. Please read the small FAQ on what is depreciation recapture. The IRS taxes capital gains on the sale or transfer of rental property a little different than the property which was not used for rental. The capital gains tax calculator on sale of rental property must there account for following two taxes
- Capital gains tax rate of 0%, 15%, or 20% depending on filing status and taxable income
- Depreciation recapture tax rate of 25%
Reporting the Sale on 1099-S and on Form 8949
If there is any capital gains profit after the exclusion under section 121 , a legal obligation is cast upon the closing agent to report the sale on the Form 1099-S,Proceeds From Real Estate Transactions. Once , you as a seller of your main home , you get 1099-S from closing agent , you need to report the sale or exchange of your main home on Form 8949, Sale and Other Dispositions of Capital Assets, if:
- You have a gain and do not qualify to exclude all of it,
- You have a gain and choose not to exclude it, or
- You received a Form 1099-S.
Hope you find the real estate capital gains calculator useful!