Does West Virginia have a capital gains tax?
West Virginia has no separate capital gains tax, but it taxes capital gains as part of the personal income tax. A resident’s West Virginia adjusted gross income starts from federal adjusted gross income under W. Va. Code section 11-21-12, so the gain on an apartment building flows onto the state return and is taxed at the regular rates, which run from 2.11% to 4.58% for 2026.
West Virginia makes no distinction between short-term and long-term gain. Holding a building more than a year lowers your federal rate but not the state rate.
West Virginia income tax rates for 2026
Senate Bill 392, signed March 31, 2026, cut every West Virginia income tax rate by 5%, retroactive to January 1, 2026. The new rates are in W. Va. Code section 11-21-4j, which took effect June 12, 2026. Single filers, heads of household and married couples filing jointly all use the same table; married people filing separately use brackets half as wide.
- Because the joint brackets are the same as the single brackets, a married couple reaches 4.58% at the same $60,000 as a single filer.
- More cuts may follow. Under section 11-21-4h, each August 15 starting in 2026 the state compares general revenue collections with an inflation-adjusted fiscal 2019 base, and any surplus can trigger a further cut, capped at 10%, starting with the second tax year after the test.
| West Virginia taxable income | Tax |
|---|---|
| Up to $10,000 | 2.11% |
| $10,000 to $25,000 | $211.00 plus 2.81% of the excess |
| $25,000 to $40,000 | $632.50 plus 3.16% of the excess |
| $40,000 to $60,000 | $1,106.50 plus 4.22% of the excess |
| Over $60,000 | $1,950.50 plus 4.58% of the excess |
How West Virginia and federal tax stack on a sale
You owe both, figured separately. For 2026, Revenue Procedure 2025-32 sets the federal 0% long-term capital gains rate to apply up to $98,900 of taxable income on a joint return, 15% up to $613,700 and 20% above that ($545,500 for single filers). The part of the gain equal to depreciation is unrecaptured Section 1250 gain, taxed at ordinary rates up to 25%, and the 3.8% net investment income tax applies once modified AGI passes $250,000 joint or $200,000 single.
West Virginia then taxes the whole gain at 4.58% for most sellers. A top-bracket seller pays roughly 20% plus 3.8% plus 4.58% on the capital gain portion, and up to 25% plus 3.8% plus 4.58% on the depreciation portion. With the federal cap on state and local tax deductions, the state tax is mostly an added cost.
Per $100,000 of gain, that works out to about $28,380 on the capital gain portion ($20,000 federal, $3,800 NIIT and $4,580 West Virginia) and up to $33,380 on the depreciation portion. Married couples who file separately reach the 4.58% rate at $30,000 of taxable income each, half the joint threshold, so filing status rarely changes the state rate on a building sale.
West Virginia withholding when a nonresident sells
When a nonresident sells West Virginia real property, the closing agent must withhold tax before the deed is recorded. Under W. Va. Code section 11-21-71b, the amount is 2.5% of the total payment, or, if the closing agent chooses, a percentage of the estimated capital gain. The statute sets that gain rate at 6.5% but lets the Tax Commissioner set different percentages, and the Tax Division’s current guidance (Publication TSD-389 and Form WV/NRSR, revised April 2026) uses 4.58%, matching the new top income tax rate. The person responsible is the real estate reporting person under federal rules, usually the settlement agent, who pays it to the Tax Commissioner within 30 days.
Total payment means the net proceeds actually paid to the seller: the sales price less secured debt paid off at closing and the seller’s settlement costs. A seller with a large loan payoff therefore has much less withheld than 2.5% of the price.
An entity counts as a nonresident unless it was formed under West Virginia law or is qualified or registered with the Tax Commissioner, so an out-of-state LLC that never registered faces withholding.
- Withholding does not apply if each seller certifies, in the deed or a recorded affidavit, that they are a West Virginia resident or resident entity.
- A certificate from the Tax Commissioner showing no tax due or a reduced amount replaces the standard withholding. The application, Form WV/NRAE, must reach the Tax Division at least 21 days before closing.
- Foreclosures, deeds in lieu, sales by government bodies, principal residences and zero-consideration deeds are exempt.
- The amount withheld is a credit on your West Virginia nonresident return, and any excess is refunded.
Transfer tax on a West Virginia sale
West Virginia’s real property transfer tax is modest. Under W. Va. Code section 11-22-2, the state charges $1.10 for each $500 of value, and the county adds 55 cents per $500, which a county commission can raise as high as $1.65. The seller pays it unless the buyer accepts the deed without it, and a $20 recording fee goes to the Affordable Housing Fund.
On a $2,000,000 sale, the state tax is $4,400 and the county tax ranges from $2,200 to $6,600 depending on the county. The tax is a selling expense that reduces your gain.
Depreciation recapture in West Virginia
West Virginia has no special recapture rate. The depreciation portion of your gain is taxed at the same rates as the rest of your income, 4.58% for nearly any building sale. The federal split between unrecaptured Section 1250 gain and capital gain changes the federal bill only.
If a cost segregation study moved part of the building’s cost into shorter-lived personal property, the federal recapture on those components is ordinary income. West Virginia taxes that at 4.58% too, so the study changes the federal result much more than the state one.
Worked example: selling a $2M apartment building in West Virginia
A married couple living in Morgantown sells a 28-unit building in Monongalia County for $2,000,000, with $90,000 of selling costs. They bought it for $1,000,000 and have claimed $300,000 of depreciation, so the adjusted basis is $700,000 and the gain is $1,210,000: $300,000 of unrecaptured Section 1250 gain and $910,000 of other long-term gain. They have $200,000 of other taxable income, mostly wages, and an $800,000 loan.
Federal tax: the $300,000 of Section 1250 gain stacks on the $200,000 of other income. It is taxed at 22% to $211,400, 24% to $403,550 and the 25% maximum above that, for $72,737. The $910,000 of capital gain starts at $500,000, so $113,700 is taxed at 15% and $796,300 at 20%, or $176,315. Their modified AGI of $1,410,000 is $1,160,000 over the $250,000 NIIT threshold, which is less than the $1,210,000 gain, so the 3.8% NIIT applies to $1,160,000 and comes to $44,080. Federal total: $293,132.
West Virginia tax: their other income already passes $60,000, so the full $1,210,000 gain is taxed at 4.58%, or $55,418.
Combined, the couple owes $348,550, about 28.8% of the gain. After the loan payoff they receive $1,110,000 at closing, or about $761,450 after income tax.
| Item | Amount |
|---|---|
| Sale price | $2,000,000 |
| Adjusted basis | $700,000 |
| Total gain | $1,210,000 |
| Federal tax on Section 1250 gain (22% to 25%) | $72,737 |
| Federal tax on capital gain (15%/20%) | $176,315 |
| Net investment income tax (3.8%) | $44,080 |
| West Virginia income tax (4.58%) | $55,418 |
| Total income tax | $348,550 |
The same sale by an out-of-state owner
If the couple lived in Ohio, the settlement agent would withhold 2.5% of the $1,110,000 in net proceeds, $27,750, before recording the deed. Under the gain method at the Tax Division’s current 4.58% rate, the withholding on the $1,210,000 estimated gain would be $55,418, about the same as the couple’s actual West Virginia tax, so the choice of method matters.
Either way the withholding is a prepayment. The couple would file a West Virginia nonresident return to report the West Virginia-source gain and claim whatever was withheld against the tax, and their home state may tax the gain too and allow a credit. If they expect to owe less, a certificate from the Tax Commissioner before closing can reduce the amount withheld.
How a 1031 exchange changes the West Virginia tax
A 1031 exchange defers the West Virginia tax along with the federal tax. Because the state return starts from federal AGI, and gain deferred under Section 1031 is never in federal AGI, West Virginia has nothing to tax in the year of the exchange. In the example, reinvesting the full $1,110,000 into a replacement priced at $1,910,000 or more would defer all $348,550.
West Virginia has no clawback, so the replacement can be in Pennsylvania, Virginia or anywhere else in the country with no annual West Virginia filing. Nonresident sellers should plan the withholding question early, since the statute has no exchange exemption. Our page on the 1031 exchange in West Virginia covers that step.
The capital gains tax calculator and the depreciation recapture calculator run the federal side with your own numbers.
Ways West Virginia sellers reduce the tax
At 4.58%, the state share is the smaller part of the bill, so most planning targets the federal side.
- A full 1031 exchange, which defers both federal and West Virginia tax.
- An installment sale, which spreads gain over several years and can keep more of it in the federal 15% bracket.
- Timing a sale for a later year if a further revenue-triggered rate cut is announced, since each cut applies from the second tax year after the August test.
- Documenting every capital improvement to raise your basis.
- Holding until death, when heirs receive a stepped-up basis.
Selling a West Virginia apartment building
Skyline buys apartment buildings with five or more units in West Virginia, from Morgantown and Charleston to Huntington and the Eastern Panhandle. We buy directly, close on your timeline, and can work inside 1031 deadlines. If you live out of state, we can set a closing date that leaves time to apply for a Tax Commissioner certificate.
For carrying costs a buyer will weigh, see our page on the property tax rate in West Virginia, and for the tenant rules that come with the building, West Virginia landlord-tenant law for apartment owners.
Selling? Spread the tax with seller-carry terms
If a large tax bill is what is keeping you from selling, an installment sale may help. When you carry part of the price as a note, the gain is generally reported as you receive payments instead of all in the year of sale. Some parts of the gain, such as certain depreciation recapture, can still be due up front, so run the numbers with your CPA first.
Skyline Capital Investments buys apartment buildings with five or more units and can offer seller-carry terms, or a delayed closing that fits your 1031 timeline. Send the address and unit count and we typically respond within 48 hours. How seller financing works · How an installment sale is taxed · Seller financing calculator.
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