Long-Term Capital Gain Calculator
Calculation Results:
Understanding Long-Term Capital Gains
A long-term capital gain is the profit you make from selling an asset (like stocks, real estate, or other investments) that you've owned for more than one year. This is distinct from short-term capital gains, which apply to assets held for one year or less and are typically taxed at your ordinary income tax rate.
Why is the Holding Period Important?
The distinction between long-term and short-term is crucial because long-term capital gains often qualify for preferential tax rates, which can be significantly lower than ordinary income tax rates. This encourages long-term investment.
How to Calculate Your Capital Gain
The basic formula for calculating capital gain is straightforward:
Capital Gain = Net Sale Price - Adjusted Cost Basis
- Asset Purchase Price: This is the original amount you paid for the asset.
- Asset Sale Price: This is the amount you received when you sold the asset.
- Selling Expenses: These are costs directly related to selling the asset, such as real estate agent commissions, legal fees, or brokerage fees. These expenses reduce your net sale price.
- Capital Improvements: These are significant expenses that add value to the property, prolong its useful life, or adapt it to new uses (e.g., a new roof, a major kitchen remodel). These costs are added to your original purchase price to form your "adjusted cost basis," reducing your taxable gain. Routine repairs and maintenance are generally not considered capital improvements.
- Adjusted Cost Basis: This is your original purchase price plus any capital improvements. It represents your total investment in the asset for tax purposes.
- Net Sale Price: This is your asset sale price minus any selling expenses.
Long-Term Capital Gains Tax Rates (U.S. Federal, 2024 Single Filer Example)
The tax rate on long-term capital gains depends on your taxable income. For 2024, the federal rates for single filers are generally:
- 0% Rate: For taxable income up to $47,025.
- 15% Rate: For taxable income over $47,025 up to $518,900.
- 20% Rate: For taxable income over $518,900.
Note: These thresholds can change annually and vary based on your filing status (e.g., Married Filing Jointly, Head of Household). State capital gains taxes may also apply.
Using the Calculator
Our Long-Term Capital Gain Calculator helps you estimate your potential gain and the associated federal tax liability. Simply input:
- Asset Purchase Price: The original cost of your asset.
- Asset Sale Price: The amount you sold it for.
- Selling Expenses: Any costs incurred during the sale.
- Capital Improvements: Money spent to enhance the asset's value.
- Approx. Taxable Income (Ordinary): Your estimated income from other sources (e.g., salary) before considering this capital gain. This helps determine your capital gains tax bracket.
The calculator will then provide your adjusted cost basis, net sale price, total capital gain, the estimated long-term capital gains tax rate, the estimated tax due, and your net profit after tax.
Disclaimer: This calculator provides an estimate based on simplified federal tax rules for a single filer and does not account for all possible tax scenarios, deductions, or state taxes. It assumes the entire capital gain falls into a single tax bracket determined by your approximate taxable income. For precise tax advice, please consult with a qualified tax professional.
Example Scenarios:
Example 1: Selling Stocks
Imagine you bought stocks for $50,000 and sold them for $80,000 after holding them for several years. You paid $100 in brokerage fees when selling, and made no capital improvements. Your ordinary taxable income for the year is $40,000.
- Asset Purchase Price: $50,000
- Asset Sale Price: $80,000
- Selling Expenses: $100
- Capital Improvements: $0
- Approx. Taxable Income: $40,000
Calculation:
- Adjusted Cost Basis: $50,000 + $0 = $50,000
- Net Sale Price: $80,000 – $100 = $79,900
- Total Capital Gain: $79,900 – $50,000 = $29,900
- Combined Income for Bracket Determination: $40,000 (ordinary) + $29,900 (gain) = $69,900. This falls into the 15% long-term capital gains tax bracket for a single filer.
- Estimated Tax: $29,900 * 0.15 = $4,485
- Net Profit After Tax: $29,900 – $4,485 = $25,415
Example 2: Selling Real Estate
You purchased a rental property for $300,000. Over the years, you spent $25,000 on a new roof and kitchen remodel. You sold the property for $550,000, incurring $33,000 in realtor commissions and closing costs. Your ordinary taxable income is $180,000.
- Asset Purchase Price: $300,000
- Asset Sale Price: $550,000
- Selling Expenses: $33,000
- Capital Improvements: $25,000
- Approx. Taxable Income: $180,000
Calculation:
- Adjusted Cost Basis: $300,000 + $25,000 = $325,000
- Net Sale Price: $550,000 – $33,000 = $517,000
- Total Capital Gain: $517,000 – $325,000 = $192,000
- Combined Income for Bracket Determination: $180,000 (ordinary) + $192,000 (gain) = $372,000. This falls into the 15% long-term capital gains tax bracket for a single filer.
- Estimated Tax: $192,000 * 0.15 = $28,800
- Net Profit After Tax: $192,000 – $28,800 = $163,200