Capital Gains on Home Sale Calculator
Calculate your estimated adjusted cost basis, net amount realized, realized capital gain, and net gain after applying a user-entered exclusion on a home sale.
Cost Basis, Selling Price & Exclusion
Total Realized Capital Gain: $280,000.00
Adjusted Cost Basis & Realized Gain Formula
Adjusted Cost Basis = Original Purchase Price + Capital Improvements + Basis Adjustments | Realized Gain = (Selling Price โ Selling Expenses) โ Adjusted Cost Basis- Amount Realized = Home Selling Price minus Selling Expenses (agent commissions, transfer taxes, legal/title fees).
- Estimated Realized Gain = Amount Realized minus Estimated Adjusted Cost Basis.
- Gain After Exclusion = max(0, Realized Gain โ User-Entered Exclusion Amount).
Step-by-Step Worked Example
Calculation Steps:
- Estimated Adjusted Cost Basis = $310,000 + $45,000 + $5,000 = $360,000
- Realized Capital Gain = $640,000 โ $360,000 = $280,000
- Gain After Exclusion = $280,000 โ $250,000 = $30,000
How to Use This Calculator
- 1Enter your original purchase price and documented capital improvements (such as room additions, new roof, HVAC replacement, or kitchen remodel).
- 2Enter your expected selling price and total selling expenses (commissions, title, transfer taxes).
- 3Enter an applicable gain exclusion amount (e.g., $250,000, $500,000, or $0 if the property does not qualify) and any other basis adjustments.
Assumptions & Limitations
- Provided strictly as an educational estimate of cost basis and realized gain; this is not tax or legal advice.
- Routine repairs and maintenance do not increase cost basisโonly permanent capital improvements add to basis.
- Investment properties or homes with prior rental depreciation may be subject to depreciation recapture rules.
Frequently Asked Questions
Does my remaining mortgage balance affect my capital gain on a home sale?
No. Capital gain is determined by your Selling Price (less selling expenses) minus your Adjusted Cost Basis (original price plus improvements), regardless of whether you have a large mortgage or own the home free and clear.
What is the Section 121 home sale exclusion?
Under IRS Section 121, homeowners who owned and used their home as a primary residence for at least 2 of the 5 years prior to sale may qualify to exclude up to $250,000 of capital gain ($500,000 for married couples filing jointly). Always verify eligibility with a CPA.
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