Capital Gains Tax in Colorado

Colorado taxes capital gains at up to 4.4% at the state level. Layer on the federal 20% and the 3.8% net investment income tax and a seller can lose up to 28.2% of the gain on an investment property.

Colorado's capital gains rate, broken down

Three pieces make up that 28.2% ceiling, and you can check how they apply to your own sale, recapture included, in the capital gains tax calculator.

• 20% at the federal level for long-term gains
• 3.8% NIIT, which applies once modified adjusted gross income passes a set threshold
• 4.4% from Colorado, the state's flat rate on the gain

Where the 1031 exchange fits

Reinvesting the proceeds into a like-kind property under Section 1031 defers all three pieces at once. Work through your specific numbers in the 1031 exchange calculator and get your exchange deadlines from the timeline calculator.

Things to know before you exchange

• Selling in Colorado does not add any extra exchange paperwork beyond the standard federal deadlines.
• Boot from a Colorado sale, cash you keep or debt you do not replace, is taxed even inside a 1031.