Home
Back
Rental Property Sale Tax Formula:
| From: | To: |
When you sell a rental property in Florida, you may owe federal taxes on two components: capital gains (profit from sale) and depreciation recapture (tax on previously claimed depreciation deductions). Florida has no state income tax, so only federal taxes apply.
The calculator uses the following formula:
Where:
Explanation: The calculation separates the gain into capital gains portion (taxed at capital gains rates) and depreciation recapture (taxed at 25%).
Details: Florida has no state income tax, so this calculator only computes federal taxes. The capital gains rate depends on your income level and filing status.
Tips: Enter the sale price, your adjusted cost basis (original purchase price plus improvements minus land value), total depreciation claimed, and your estimated capital gains rate (typically 15% or 20%).
Q1: What's included in the adjusted cost basis?
A: Original purchase price (minus land value), plus capital improvements, minus any casualty losses or depreciation claimed.
Q2: How do I determine my capital gains rate?
A: For 2023, 15% applies if taxable income is $44,625-$492,300 (single) or $89,250-$553,850 (married). Above these amounts, 20% applies.
Q3: Can I avoid depreciation recapture tax?
A: Only through a 1031 exchange, which defers both capital gains and depreciation recapture taxes by reinvesting in another property.
Q4: How is land value handled?
A: Land isn't depreciable, so its value should be subtracted from both purchase price and sale price before calculating depreciation recapture.
Q5: Are there other taxes I might owe?
A: If you're subject to Net Investment Income Tax (3.8%) or if the property was owned less than one year (short-term capital gains), additional taxes may apply.