Calculate capital gains tax on your home or property sale. Includes Section 121 primary residence exclusion ($250K/$500K) and depreciation recapture for rentals.
How to Use This Real Estate Capital Gains Calculator
Enter your original purchase price, sale price, any capital improvements (additions, renovations, new systems), and selling costs (agent commissions, closing fees). Select whether the property is your primary residence to apply the Section 121 exclusion.
If it is your primary residence and you have lived there 2 of the last 5 years, up to $250,000 (single) or $500,000 (married) of your gain is tax-free. The calculator also checks for NIIT liability on high-income sellers.
The Formula
Adjusted Cost Basis = Purchase Price + Improvements + Purchase Costs
Net Sale Proceeds = Sale Price β Selling Costs
Gross Gain = Net Sale Proceeds β Adjusted Cost Basis
Section 121 Exclusion = $250,000 (single) / $500,000 (married, if eligible)
Taxable Gain = Max(0, Gross Gain β Section 121 Exclusion)
Tax = Taxable Gain Γ LTCG Rate (+ NIIT if MAGI > $200K/$250K)
Example
Single, bought home for $300K, added $50K improvements, selling for $600K with $18K commissions:
Adjusted basis: $300K + $50K = $350K
Net proceeds: $600K β $18K = $582K | Gross gain: $232K
Section 121 exclusion: $250K | Taxable gain: $0 (gain is below exclusion!)
Tax owed: $0
Frequently Asked Questions
What is the Section 121 home sale exclusion?
Section 121 allows you to exclude up to $250,000 (single) or $500,000 (married filing jointly) of capital gains from the sale of your primary residence. To qualify, you must have owned and used the home as your primary residence for at least 2 of the last 5 years before the sale. The 2-year periods of ownership and use do not need to be continuous.
What improvements can I add to my home cost basis?
You can add the cost of capital improvements to your home cost basis β this increases your basis and reduces your taxable gain. Qualifying improvements add value, prolong useful life, or adapt the home to new uses: additions, new roof, HVAC system, kitchen renovation, bathroom addition, landscaping, fencing, and similar permanent upgrades. Regular maintenance and repairs do not qualify.
How is depreciation recapture taxed on rental property?
If you claimed depreciation deductions on a rental property, the IRS requires "recapture" of those deductions when you sell. Depreciation recapture (Section 1250) is taxed at a maximum rate of 25%, regardless of your regular capital gains rate. The recaptured amount is the total depreciation you claimed (or should have claimed) during ownership. Any remaining gain after recapture is taxed at regular LTCG rates.
Can I exclude gains from a rental property under Section 121?
Partially. If you rented a property and then moved in and lived there for 2+ of the last 5 years, you can claim the Section 121 exclusion for the portion of gains attributable to the period it was your primary residence. However, you cannot exclude depreciation recapture. The exclusion is also reduced for periods of "non-qualified use" after 2008.
What selling costs can I deduct from my home sale proceeds?
You can reduce your taxable gain by deducting selling costs from your gross proceeds, including: real estate agent commissions, title insurance, legal fees, escrow fees, transfer taxes, recording fees, and advertising costs. These are not deductions on your tax return but rather reductions to your net sale price, which reduces the calculated capital gain.