1. What is Rental House Sale Tax?

The tax on the sale of a rental property in California includes federal capital gains tax (15-20%), depreciation recapture (25%), and California state income tax (up to 13.3%). This calculator helps estimate your total tax liability.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( Sale\ Price \) — Final sale price of the property
• \( Basis \) — Adjusted cost basis of the property
• \( Depreciation\ Recapture \) — Total depreciation taken during ownership
• \( Capital\ Gains\ Rate \) — Federal long-term capital gains rate (15-20%)
• \( State\ Tax\ Rate \) — California state income tax rate (up to 13.3%)

3. Importance of Tax Calculation

Details: Accurate tax estimation is crucial for financial planning when selling a rental property. The tax liability can significantly impact your net proceeds from the sale.

4. Using the Calculator

Tips: Enter the sale price, your adjusted cost basis, total depreciation recapture, your capital gains tax rate (typically 15-20%), and your California state tax rate (up to 13.3%).

5. Frequently Asked Questions (FAQ)

Q1: What is depreciation recapture?
A: When you sell a rental property, the IRS "recaptures" the depreciation you've claimed over the years at a 25% rate.

Q2: How is adjusted cost basis calculated?
A: Original purchase price plus improvements minus depreciation taken.

Q3: Are there ways to reduce this tax?
A: Consider a 1031 exchange to defer taxes, or time the sale for a low-income year.

Q4: What if I sold at a loss?
A: You may be able to deduct the loss against other income (subject to limitations).

Q5: Does this include property tax?
A: No, this calculator focuses on income tax consequences. Property tax is separate.