Whether you're tired of being a landlord or have other reasons to sell, it’s important to understand the tax implications of selling your rental property. From capital gains to federal taxes, this guide breaks down what you need to know and offers a helpful tool to get you started.

Capital Gains and Capital Losses

When you sell a rental property, you may face either a capital gain or a capital loss. A capital gain is the profit you make from the sale, while a capital loss occurs when you sell for less than your adjusted tax basis.

If you’ve held the property for more than a year, your gain is considered a long-term capital gain, typically taxed between 0% and 20%. If you owned the property for less than a year, any gain is taxed as short-term capital gains, which is taxed at your ordinary income tax rate.

The basis of your rental property includes what you originally paid plus expenses related to buying or improving it. If you've made improvements, that can increase your basis and reduce your taxable gain. If the property’s value has declined due to damage or depreciation, that reduces your basis and could increase your gain.

Rental Property Tax Calculator

Use this quick calculator to estimate your potential capital gains when selling a rental property.

Other Tax Consequences

You may also be subject to the Net Investment Income Tax (NIIT), which adds a 3.8% tax on investment income if you exceed certain income thresholds. Also note that since this is not a primary residence, you won't qualify for the $250,000/$500,000 capital gains exclusion.

How to Sell Without Extra Costs

Because taxes can take a big bite out of your profit, many sellers look for ways to avoid additional expenses. Real estate agents may charge 5–6% commissions, and you may be asked to make repairs before listing. Selling to a cash buyer like Enlight Homebuyers can save you money and time.

We buy rental properties in any condition, no commissions, no repairs, no fees. Just a straightforward cash offer so you can move forward.

Call Enlight Homebuyers at 801-939-0123 today to get a free, no-obligation offer. You could close in as little as 7 days.