Investment Property vs. Personal Property (Taxes) ??

What is the difference in the capital gains taxes for owning an investment (home/proerty) as opposed to owning a (personal resident)



Capital gains reflect the change in value of a property’s value during the time that you own it.

Capital gains come in two flavors, short-term (less than 1 year) and long-term (over 1 year). Long-term gains are taxed by the Federal government at 15% - short-term are taxed at the seller’s nominal income tax rate (the rate that you pay depending on your personal income).

If you own an investment property and sell it, there will be a capital gain consequesnce. There are ways to defer them (e.g., using a 1031 exchange, etc.)…but there is a consequence.

For your own private residence, if you have owned and lived in it for 2 out of the last 5 years, then $250K of the gain ($500K for married filing jointly) is excluded for tax purposes.


“$250K of the gain …is excluded for tax purposes”

just thought i’d emphasis that one part.


The short answer to your question is NONE.

The tax rates are the same for investment real estate and for personal use real estate if the sale is a taxable sale.

To all,

Thanks for the responses.

Dave T.


Is the gain taxed at my personal tax rate?? What about the one year mark that kdhastedt brought up. Do you know how that works? I am still a little fuzzy on this. Numbers would help to clear this up for me.

Again thanks,


If your investment property or your personal use real estate is held one year or less before sale, your short term capital gains tax rate is the same as your ordinary income tax rate.

If your investment property or your personal use real estate is held at least one year and one day before sale, your long term capital gains tax rate is capped at 15% this year.

In each case, the tax rate is the same for investment property and for personal use property if the sale is a taxable sale.

Owner occupants who sell their primary residence with at least two years of ownship and occupancy in the five years prior to the sale, qualify for a capital gains exclusion of up to $250K per taxpayer. Profits that exceed $250K per taxpayer are still taxed at the long term capital gains tax rate.

What about a second home? Is there any difference in that?

The property was soley for personal use and not rented during the time of ownership.


Owned one year or less, short term capital gain (ordinary income tax rate).

Owned at least one year, long term capital gains tax rate.