--- title: How Are Capital Gains Taxed? description: Calculating exactly how your capital gains are taxed is not always so simple. There are many complicated rules and stipulations to keep in mind. image: http://www.realized1031.com/hubfs/Images/photo/people/business/people-laptop-backlit-window-optimized-is511316728.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # How Are Capital Gains Taxed? Posted Mar 4, 2023 ![People working on Capital Gains Tax calculations](http://www.realized1031.com/hs-fs/hubfs/Images/photo/people/business/people-laptop-backlit-window-optimized-is511316728.jpg?width=629&name=people-laptop-backlit-window-optimized-is511316728.jpg "People working on Capital Gains Tax calculations") Calculating exactly how your capital gains are taxed is not always so simple. There are many complicated rules and stipulations to keep in mind, and it can get confusing very quickly. We've broken down the taxation of your capital here. **Long-Term vs. Short-Term Assets** An asset is considered long term if it is held for more than a year, and it is considered short term if it is held for less than a year. This simply means that the clock starts ticking any time you purchase an asset and stops when you sell it. A short-term asset is taxed at the same rate as your income. It receives no special treatment as far as taxes are considered. Long-term assets are in fact eligible for special rates, which make them a little more complicated. We've explained the breakdown of long-term assets below. **Long-term Capital Gains** Contrary to popular belief, the tax rate on your long-term capital gain is not always 15%. The amount you will be taxed depends on many factors, including what tax bracket you fall into and what type of asset you are selling. Taxes on capital gains also fluctuate based on presidential administration and by state. For more information on how capital gains taxes vary by state, reference our [ State Capital Gains Map](https://www.realized1031.com/capital-gains-tax-rate) . **Investment Securities** 10% to 15% Tax Bracket: If you fall in the 10% to 15% tax bracket, your capital gains rate is 0%. More taxpayers than you might think fall into this bracket. For 2022, if your taxable income is less than $41,675 for a single filer, $55,800 for a head of household filer, or $83,350 for a married couple filing a joint return, then this applies to you. 25% to 35% Tax Bracket: If you fall in the 25% to 35% tax bracket, your capital gains rate is 15%. Most taxpayers fall into this tax bracket. You fall into this tax bracket if, for the 2022 tax year, your taxable income is between $41,676 and $459,750 for a single filer, between $55,801 and $488,500 for a head of household filer, or between $83,351 and $517,200 for a married couple filing a joint return. 39.6% Tax Bracket: If you fall in the 39.6% tax bracket, your capital gains rate is 20%. For the 2022 tax year, if your taxable income is more than $459,750 for a single filer, more than $488,500 for a head of household filer, or more than $517,200 for a married couple filing a joint return, then you fall into this bracket. **Investment Real Estate** Simply stated, your capital gain on a real estate investment property is equal to the sales price minus its [ adjusted basis](https://www.realized1031.com/glossary/adjusted-basis) . Here, the same tax rates still apply for each tax bracket. For instance, the 10% to 15% tax bracket pays 0% on capital gains, the 25% to 35% bracket pays 15%, and the highest tax bracket pays 20%. For more on real estate specifics, reference our [ guidebook](https://www.realized1031.com/1031-exchange-explained-ebook) and [ blog](https://www.realized1031.com/blog/realized-vs.-recognized-gains-in-real-estate). **The 3.8% Medicare Surtax** The Health Care and Education Reconciliation Act of 2010 put into effect a 3.8% surtax on certain income in 2013. For individuals, the tax takes into account two factors: your net investment income (NII) and your modified adjusted gross income (MAGI). The MAGI above a certain threshold is compared to the NII, and the tax is applied to whichever value is the lesser of the two. Below are the MAGI thresholds: 1. $250,000 for married couples filing together 2. $125,000 for married couples filing separately 3. $200,000 for all other taxpayers For trusts and estates, the Medicare surtax is similar yet slightly different. The tax is still dependent on two factors: the trust or estate's undistributed net invested income (UNII) and its adjusted gross income (AGI). Just as with the individual surtax, the AGI above a certain threshold is compared with the UNII, and the lesser of the two is taxed. However, contrary to the individual surtax, the threshold for a trust or estate's AGI is adjusted every year for the dollar amount that starts the highest tax bracket. **Capital Losses** Capital losses are used to offset capital gains on your tax return. For instance, short-term capital losses are subtracted from short-term capital gains and long-term capital losses are subtracted from long-term capital gains. Although capital losses may cast a cloud over anyone's personal finances, there is a silver lining as far as taxes are concerned. Any capital loss in excess of a capital gain is tax deductible up to a certain limit. This limit is dependent on how you file your taxes (married couples together, separately or single filer). Download The Capital Gains Tax Calculator [![Cap Gains Calculator For Investors](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/laptop-capital-gains-calculator-spreadsheet.jpg?width=500&height=290&name=laptop-capital-gains-calculator-spreadsheet.jpg "Estimate the cap gains tax owed ...") ](https://www.realized1031.com/blog/how-are-capital-gains-taxed#blogform) Download Calculator ---   --- ### Cap Gains Calculator For Investors ![Download The Capital Gains Tax Calculator](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/laptop-capital-gains-calculator-spreadsheet.jpg?width=500&height=290&name=laptop-capital-gains-calculator-spreadsheet.jpg) Estimate the cap gains tax owed after selling an asset or property By providing your email and phone number, you are opting to receive communications from Realized. 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Long-Term vs. Short-Term Assets An asset is considered long term if it is held for more than a year, and it is considered short term if it is held for less than a year. This simply means that the clock starts ticking any time you purchase an asset and stops when you sell it. A short-term asset is taxed at the same rate as your income. It receives no special treatment as far as taxes are considered. Long-term assets are in fact eligible for special rates, which make them a little more complicated. We've explained the breakdown of long-term assets below. Long-term Capital Gains Contrary to popular belief, the tax rate on your long-term capital gain is not always 15%. The amount you will be taxed depends on many factors, including what tax bracket you fall into and what type of asset you are selling. Taxes on capital gains also fluctuate based on presidential administration and by state. For more information on how capital gains taxes vary by state, reference our State Capital Gains Map . Investment Securities 10% to 15% Tax Bracket: If you fall in the 10% to 15% tax bracket, your capital gains rate is 0%. More taxpayers than you might think fall into this bracket. For 2022, if your taxable income is less than $41,675 for a single filer, $55,800 for a head of household filer, or $83,350 for a married couple filing a joint return, then this applies to you. 25% to 35% Tax Bracket: If you fall in the 25% to 35% tax bracket, your capital gains rate is 15%. Most taxpayers fall into this tax bracket. You fall into this tax bracket if, for the 2022 tax year, your taxable income is between $41,676 and $459,750 for a single filer, between $55,801 and $488,500 for a head of household filer, or between $83,351 and $517,200 for a married couple filing a joint return. 39.6% Tax Bracket: If you fall in the 39.6% tax bracket, your capital gains rate is 20%. For the 2022 tax year, if your taxable income is more than $459,750 for a single filer, more than $488,500 for a head of household filer, or more than $517,200 for a married couple filing a joint return, then you fall into this bracket. Investment Real Estate Simply stated, your capital gain on a real estate investment property is equal to the sales price minus its adjusted basis . Here, the same tax rates still apply for each tax bracket. For instance, the 10% to 15% tax bracket pays 0% on capital gains, the 25% to 35% bracket pays 15%, and the highest tax bracket pays 20%. For more on real estate specifics, reference our guidebook and blog. The 3.8% Medicare Surtax The Health Care and Education Reconciliation Act of 2010 put into effect a 3.8% surtax on certain income in 2013. For individuals, the tax takes into account two factors: your net investment income (NII) and your modified adjusted gross income (MAGI). The MAGI above a certain threshold is compared to the NII, and the tax is applied to whichever value is the lesser of the two. Below are the MAGI thresholds: $250,000 for married couples filing together $125,000 for married couples filing separately $200,000 for all other taxpayers For trusts and estates, the Medicare surtax is similar yet slightly different. The tax is still dependent on two factors: the trust or estate's undistributed net invested income (UNII) and its adjusted gross income (AGI). Just as with the individual surtax, the AGI above a certain threshold is compared with the UNII, and the lesser of the two is taxed. However, contrary to the individual surtax, the threshold for a trust or estate's AGI is adjusted every year for the dollar amount that starts the highest tax bracket. Capital Losses Capital losses are used to offset capital gains on your tax return. For instance, short-term capital losses are subtracted from short-term capital gains and long-term capital losses are subtracted from long-term capital gains. Although capital losses may cast a cloud over anyone's personal finances, there is a silver lining as far as taxes are concerned. Any capital loss in excess of a capital gain is tax deductible up to a certain limit. This limit is dependent on how you file your taxes (married couples together, separately or single filer).", "articleSection" : [ "Capital Gains" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2023-04-04T15:34:18+0000", "datePublished" : "2023-04-04T15:34:18+0000", "description" : "Calculating exactly how your capital gains are taxed is not always so simple. 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