Pennsylvania Form PA-40 Schedule D – Sale, Exchange, or Disposition of Property (2026)
Last reviewed: 2025-11-08
Use the Pennsylvania Tax Form Calculator Form PA-40 Schedule D: Sale, Exchange, or Disposition of Property as a stand alone tax form calculator to quickly calculate specific amounts for your 2026 Pennsylvania state tax return. Alternatively, you can use one of our Combined Federal and State Tax Estimators to quickly calculate your salary, tax, and take-home pay.
Form PA-40 Schedule D is used to report gains or losses from the sale, exchange, or other disposition of property during 2026. This includes stocks, real estate, business equipment, and personal-use assets converted to business use. Pennsylvania law treats capital gains differently from the federal return — there is no preferential long-term capital-gain rate, and all taxable gains are included in Class D income and taxed at the state's flat 3.07 % personal income tax rate. All entries must be rounded to whole dollars.
Schedule D also applies to transactions such as installment sales, condemnations, or involuntary conversions. Each sale should be listed separately, providing acquisition and sale dates, cost basis, and other adjustments. Do not combine multiple transactions on one line.
When to File Schedule D
Attach Schedule D if you sold property in 2026, received installment sale payments, or disposed of assets that produced a gain or loss for Pennsylvania purposes. You should also file if you realized a gain reported on a federal Schedule D, even if part or all of that amount is nontaxable in Pennsylvania (e.g., sales of U.S. obligations or certain inherited property).
Completing the Schedule D Lines
Follow these Pennsylvania-specific guidelines for each section of the form:
- Lines 1–3: Enter the property description, date acquired, and date sold. Each property must have its own entry.
- Line 4: Report the total sales price or gross proceeds before subtracting selling expenses.
- Line 5: Enter the property's cost basis, including improvements, commissions, and fees.
- Line 6: Subtract any depreciation previously claimed in prior years if the asset was used for business purposes.
- Line 7: Add or subtract any other adjustments (for example, Section 179 recapture or improvements not previously expensed).
- Line 8: Computes your total adjusted basis (Line 5 – Line 6 ± Line 7).
- Line 9: Calculates the raw gain or loss (Line 4 – Line 8).
- Line 10: Multiply the gain by the percentage taxable to Pennsylvania (enter 100 % unless part of the transaction is exempt).
- Lines 11–13: Add taxable portions and any installment-sale income received this year. Line 13 carries to PA-40 Line 5.
Each transaction should be substantiated by settlement statements, brokerage confirmations, or closing documents. Losses are deductible only to the extent of Pennsylvania-recognized capital gains and may not offset other income types such as wages or dividends.
| Identification | ||
| A | Taxpayer ovals | |
| Transaction Details | ||
| 1 | Description of property sold or exchanged | |
| 2 | Date acquired | |
| 3 | Date sold | |
| 4 | Gross sales price | |
| 5 | Cost or adjusted basis (include improvements, commissions, etc.) | |
| 6 | Depreciation allowed (if applicable) | |
| 7 | Other adjustments (attach statement) | |
| 8 | Total cost basis (Line 5 − Line 6 ± Line 7) | |
| 9 | Gain or (loss) (Line 4 − Line 8) | |
| 10 | Portion taxable to Pennsylvania (see instructions; enter 0 if exempt) | |
| 11 | Total PA-taxable gain or (loss) | |
| 12 | Installment sale income received this year | |
| 13 | Total Pennsylvania taxable gain or (loss) (add Lines 11 + 12). Enter on PA-40 Line 5 | |
Examples
Example 1 – Stock Sale: You purchased 100 shares of XYZ Corp. for $5 000 in 2018 and sold them for $8 500 in 2026. Your taxable gain is $3 500 (8 500 – 5 000). Enter the details on Lines 1–9, and transfer the gain to Line 13.
Example 2 – Home Sale: You sold your personal residence for $350 000 that you purchased for $200 000. Pennsylvania follows federal exclusion rules for qualified principal-residence sales; if you meet the ownership and use test, you exclude up to $250 000 ($500 000 joint). If all gain is excluded federally, the transaction is not reported on Schedule D.
Example 3 – Installment Sale: You sold business equipment in 2026 for $20 000, receiving $5 000 this year and $15 000 next year. Enter the entire gain computation on Lines 1–11 and the $5 000 installment received on Line 12. Future payments are reported in the year received.
Example 4 – Inherited Property: Pennsylvania uses the fair market value at the date of death as the cost basis. If you sell inherited shares for their same value, no gain or loss occurs.
Important Rules
- No federal long-term or short-term distinction — all gains are taxed at 3.07 %.
- No federal capital-loss carryforward deduction.
- Gains from U.S. Treasury obligations and Pennsylvania municipal bonds are exempt.
- Losses from personal-use property (cars, furniture, etc.) are not deductible.
- Installment-sale gains are taxed in the year payments are received, not the sale year.
Last reviewed: 2025-11-08: If you believe this form requires an update, please contact us.
Further Guidance and Resources
- Form PA-40 – Individual Income Tax Return
- Official PA-40 Schedule D (2024 PDF)
- Pennsylvania Department of Revenue – PIT Forms and Instructions
Completing Schedule D accurately ensures that your capital gains and losses are reported correctly under Pennsylvania law, avoiding errors that could trigger notices or delay refunds. Be sure to retain all supporting documentation for at least four years after filing your PA-40.
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Frequently Asked Questions
What is Form PA-40?
Form PA-40 is the Pennsylvania Individual Income Tax Return used by residents, part-year residents, and nonresidents to report taxable income and claim credits or deductions.
Can I amend to claim a refund?
Yes, if withholding or estimated payments exceeded revised liability.
Does PA tax long-term capital gains?
Yes—PA taxes “net gains from the sale, exchange, or disposition of property.” This wage page doesn’t include capital gains; model them with Schedule D.
What rate does Pennsylvania use?
Pennsylvania has a flat personal income tax rate of 3.07 % for all taxable income.
Where do I enter the exclusion amount?
You do not enter it separately; if fully excluded, you simply omit the gain from your PA-40. Partial exclusions must be shown on Schedule 19.
Important Notes
All calculations are estimates for guidance only. Always review your return and consider professional advice when submitting official filings.