Real Estate Taxes / Personal Taxes

HOW TO CALCULATE HOME-SALE CAPITAL GAIN

The adjusted cost basis for your home (or any property) is its purchase price, plus most non-deductible closing costs, plus capital improvements added during ownership, minus any depreciation deducted (such as for a home office or rental use).

Your adjusted sales price is the gross sales price, minus sales costs such as the real estate sales commission. The difference between these two numbers is your taxable capital gain .

Mortgage balance is irrelevant.

From your home-sale capital gain , subtract your Internal Revenue Code 121 tax-free principal residence sale exemption up to $250,000 (up to $500,000 for a qualified married couple filing jointly).

That's presuming you owned and lived in the principal residence at least 24 of the 60 months before sale. Any remaining balance is taxable as a capital gain .