Capital Gains Calculator for Home Sellers
A great deal of the profit on a primary residence may never be taxed at all. This works out how much of yours is.
What This Calculator Does
The gain on your sale is calculated first — proceeds less selling costs, less your adjusted basis including capital improvements — and the Section 121 exclusion for a primary residence is then applied, up to $250,000 for a single filer and $500,000 for a married couple filing jointly, leaving whatever remains exposed.
Who Is This For
Written for owners selling a Miami primary residence after a long hold, couples deciding whether to sell before or after a change in filing status, and sellers who want the exclusion test understood before they list rather than after they close.
How It Works
Supply your original purchase price, the capital improvements made, your expected sale price and selling costs, and your filing status. The calculator returns the gain, the exclusion you qualify for, and the taxable remainder.
Frequently Asked Questions
How does the Section 121 exclusion work?
It allows a homeowner to exclude gain on the sale of a primary residence — up to $250,000 for a single filer and $500,000 for a married couple filing jointly. For most sellers it absorbs the entire gain, which is why a great many home sales generate no capital gains tax whatsoever.
What does the ownership and use test require?
You generally must have owned the home and lived in it as your primary residence for at least 24 of the 60 months preceding the sale. Those 24 months need not be consecutive, and the exclusion is generally available no more than once every two years.
How is my basis established?
It begins with what you paid, rises with capital improvements — a renovation, an addition, a roof, impact windows — and is adjusted by certain closing items. Repairs and routine maintenance add nothing. Keep the receipts: improvements you cannot document will not reduce the gain.
Does an investment property qualify?
It does not. Section 121 covers a primary residence. Investment and rental property follows a different calculation, and depreciation taken across the holding period is recaptured separately. Exchanging into another investment property is the usual planning route there.
Where does the net investment income tax fit?
NIIT is an additional federal tax that can reach investment income, taxable capital gain included, for taxpayers above certain income thresholds. Whether it touches you depends on your total income and filing status, so confirm the specifics with your CPA before planning around it.
Will Florida tax the gain as well?
Florida levies no personal state income tax, so no state capital gains tax applies to the sale. Federal treatment still stands, and if you moved from another state during the year, that state may have a claim on part of your income. Ask your tax advisor how the timing works.