All in one year
A cash sale: the whole gain taxed in the year of sale.
Land Sale Tax Calculator
Selling land or farmland? Enter the price, what you paid and your state to see the capital gains tax on the sale: federal, the 3.8% net investment income tax and state. Then see the same sale spread over the years you are paid, and how much more you keep. Everything runs in your browser.
Your numbers
Spread over the payment years
Seller financing: gain taxed as principal arrives (IRC 453).
This is an estimate. Getting it right down to the tee takes your actual tax forms (returns, K-1s, depreciation schedules), a consult and a paid analysis. The first 15-minute scope call is free.
Get the REAL numbers
Hans Goldstein, EAAdmitted to practice before the IRS
These are estimates. Have a qualified tax professional run your real numbers in a 15-minute scope call.
Book my 15-minute callThis is an estimate. Getting it right down to the tee takes your actual tax forms (returns, K-1s, depreciation schedules), a consult and a paid analysis. The first 15-minute scope call is free.
Year by year: payments, gain and tax
How a land sale is taxed
1. Your gain
Gain is the sale price, minus selling costs, minus your adjusted basis. For land, basis is what you paid plus capital improvements: surveys, grading, roads, wells, drainage, fencing. Land is never depreciated, so raw land has no depreciation recapture. Inherited land starts with its value at the date of death (IRS Publication 544).
2. Federal tax in layers
Land held more than a year is long-term capital gain. The gain stacks on top of your other income and fills the 0%, 15% and 20% brackets in order (IRC 1(h)). For 2026, married couples filing jointly pay 0% up to $98,900 of taxable income, 15% up to $613,700 and 20% above that (Rev. Proc. 2025-32).
3. The 3.8% net investment income tax
Gain on land held as an investment or rented out is net investment income, taxed at 3.8% above $250,000 of modified adjusted gross income for married couples and $200,000 for single filers (IRC 1411, thresholds not indexed). Gain on land used in a farming business you materially participate in is not (IRC 1411(c)(4)).
4. State tax
Most states tax the gain as ordinary income; a few have no income tax, and some give farmland its own break. Choose your state above; the note under the dropdown shows any special rule the calculator applies.
5. Spreading the gain with seller financing
Carry a note and you report the gain as principal arrives (IRC 453, Form 6252). Each year's slice of gain lands in lower brackets and may stay under the 3.8% threshold, so the total tax is often lower, not just later. Any recapture on buildings or equipment is still taxed in the year of sale (IRC 453(i)). Farm property is exempt from the Section 453A interest charge on notes over $5,000,000; other land is not (see the 453A interest charge calculator).
A worked example (2026, computed by the calculator's engine)
A married couple in California sells farmland they lease out for $4,000,000. They paid $800,000, and selling costs are 6% ($240,000), so the gain is $2,960,000. Other income is $150,000 a year.
- All in one year: $590,865 federal income tax, $108,680 net investment income tax and $357,930 California tax: $1,057,475 in 2026.
- Spread over 10 years: they take $800,000 at closing and carry a $2,960,000 note at 6% (payments of $402,169 a year). Tax is $286,945 in year one and $820,748 in total on the gain.
- They keep $236,727 more by spreading, before counting the interest they earn on the note (taxed separately as ordinary income).
If they farmed the land themselves, the $108,680 of net investment income tax would not apply to a cash sale. Change any number above and the whole page updates.
Selling farmland: what changes
Set the calculator to farmland with the two checkboxes: Farm property (on by default) and You farm it yourself. Four rules differ from raw land held as an investment:
- No Section 453A interest on a big note. Property used or produced in the trade or business of farming is exempt from the interest charge on installment notes over $5,000,000 (IRC 453A(b)(3)(B), by reference to IRC 2032A(e)(4) and (5)). A $9,000,000 note on farmland costs nothing extra; the same note on a commercial building does.
- Equipment recapture comes first. Machinery, irrigation systems and single-purpose livestock or horticultural structures sold with the farm are Section 1245 property. Their recapture is ordinary income in the year of sale, even when the rest of the gain rides the note (IRC 453(i)). Enter it in the recapture field.
- Soil and water conservation recapture. If you deducted conservation costs under IRC 175 and sell within 10 years of buying, Section 1252 treats part of the gain as ordinary income: 100% of those deductions within 5 years, then 80%, 60%, 40% and 20%, and 0% from year 10 (IRC 1252(a)(3)). Most long-held family farms are past it.
- The 3.8% tax. Rented-out farmland is an investment and owes it. Land in a farming business you materially participate in does not (IRC 1411(c)(4)).
Farmland: the Section 1062 election
Since the 2025 tax law (P.L. 119-21), a seller of qualified farmland to a qualified farmer can elect to pay the federal income tax on the gain in 4 equal yearly installments (IRC 1062). All the gain is still reported in the year of sale; only the payment is spread, and the 3.8% tax is not covered. The land must have been farmed for substantially all of the prior 10 years and carry a 10-year farm-use covenant. An installment sale spreads the gain itself. Compare both in seller financing for land and farmland.
What this calculator leaves out
One sale of land held more than a year, level yearly payments, the 2026 tables carried forward for later years. It does not model state farmland exclusions you must apply for, conservation easement deductions, a Section 1031 exchange, the alternative minimum tax on the interest, or local transfer taxes. Interest on the note is ordinary income and is not in the totals.
Sources
- Rev. Proc. 2025-32: 2026 brackets and capital gain thresholds.
- IRC 1411: 3.8% net investment income tax.
- IRC 453 and IRS Publication 537: the installment method.
- IRC 1062: the farmland installment election (P.L. 119-21, July 4, 2025).
- IRC 453A(b)(3) and IRC 1252: the farm property exemption and conservation recapture (statutes as in force October 2026).
Questions about taxes on a land sale
How much tax do you pay when you sell land?
Land held more than a year is taxed as long-term capital gain: 0%, 15% or 20% federal depending on your income (2026 brackets, Rev. Proc. 2025-32), plus the 3.8% net investment income tax if your income is over $250,000 married or $200,000 single and the land is an investment, plus your state's tax. The calculator adds those up for your numbers.
Is there depreciation recapture on land?
No. Land itself is never depreciated, so a sale of raw land has no recapture. Depreciated equipment and single-purpose farm structures sold with the land are Section 1245 property: that recapture is ordinary income in the year of sale, even on a note (IRC 453(i)). Separately, Section 1252 treats part of the gain on farmland as ordinary income if you deducted soil and water conservation costs (IRC 175) and sell within 10 years of buying (100% of those deductions within 5 years, falling 20 points a year to 0% at 10 years).
How do I calculate capital gains on a land sale?
Gain is the sale price minus selling costs minus your adjusted basis (what you paid plus improvements such as surveys, roads, wells and clearing). The gain is taxed in layers: the part that fits in the 0% bracket, then 15%, then 20%, plus the 3.8% tax and state tax. Spread the sale over several years and more of the gain stays in the lower layers each year.
Can I spread the tax on a land sale over several years?
Yes. With seller financing, you report the gain as principal arrives under the installment method (IRC 453), and the interest is taxed separately each year. Farmland notes over $5,000,000 are exempt from the Section 453A interest charge. Since 2025, a sale of qualified farmland to a qualified farmer can also use the Section 1062 election to pay the federal income tax in 4 yearly installments.
Does the 3.8% net investment income tax apply to selling farmland?
It applies to land held as an investment or rented out. It does not apply to gain on land used in a farming business in which you materially participate (IRC 1411(c)(4)). Check the box in the calculator if you farm the land yourself.
Keep going
- Seller financing for land and farmland: the rules and a $2,000,000 example.
- Seller financing calculator: the note and the seller's tax by year.
- Owner financing calculator: build the payment schedule.
- 453A interest charge calculator: notes over $5,000,000.