Cost Adjustments
Ownership Details
Qualifies for Section 121 Exclusion (up to $250,000)
You meet the 2-year ownership and residence test.
Total Gain
$164,000
Exclusion Amount
$164,000
Taxable Gain
$0
Total Tax
$0
Net Proceeds
$564,000
What is the Section 121 exclusion?
Section 121 lets you exclude up to $250,000 of profit ($500,000 if married filing jointly) from the sale of your main home. To qualify, you must have owned and lived in the home for at least 2 of the last 5 years before the sale. This can save you a large amount in taxes — many homeowners pay no capital gains tax at all on their home sale.
What counts as improvements?
Improvements are changes that add value, extend the life, or give your home a new use. Examples include a new roof, kitchen remodel, adding a bathroom, or building an extension. Routine repairs and maintenance (like painting or fixing a leak) do not count. Improvements increase your cost basis, which reduces your taxable gain when you sell.
What is depreciation recapture?
If you used your property for business or as a rental and claimed depreciation deductions, you must "recapture" that depreciation when you sell. The IRS taxes recaptured depreciation at a flat 25% rate. This applies even if you qualify for the Section 121 exclusion on the rest of your gain. It only affects the amount of depreciation you previously deducted.
Note: This calculator provides estimates based on current federal and state tax rules. Your actual tax may differ based on your full tax situation. Speak to a tax professional before making decisions about selling property.
Disclaimer: This calculator provides estimates based on current IRS rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your filing status, state of residence, deductions, and individual circumstances. Always consult a qualified tax professional or CPA before making financial decisions. Read our terms
This calculator uses official rates and thresholds from:
- IRS Publication 523 — Selling Your Home
- IRS Topic 409 — Capital Gains and Losses
- IRS Publication 17 — Your Federal Income Tax
Last verified: March 2026 · Tax year 2025. Results are indicative — consult a qualified accountant for personalised advice.