How this capital gains tax on home sale calculator works
Steps: gain = sale price − selling costs − (purchase price + improvements). If the 2-of-5-year ownership-and-use test passes, subtract $250k/$500k exclusion. The remainder stacks on your ordinary taxable income for LTCG rates (0/15/20%), then the 3.8% NIIT applies on gains for MAGI above $200k/$250k. Depreciation recapture (if you rented or home-officed the property) is taxed at 25% *before* these brackets — not modeled here. State tax varies and is not included.
Frequently asked questions
Do I have to pay tax selling my house?
Usually no: IRC §121 excludes up to $250,000 of gain for single filers ($500,000 married filing jointly) if you owned and lived in the home 2 of the last 5 years. Only sellers with gains above the exclusion — common in hot markets — owe tax on the excess.
Are improvements included in cost basis?
Yes, if documented and capital in nature: new roofs, additions, windows, landscaping. Repairs (fixing a leak) don't count — they're maintenance. Keep receipts; the improvement column here converts them into basis.
Why is only part of my extra income taxed?
Long-term gains stack on top of your ordinary income: the first slice may still ride the 0% LTCG bracket (2026: up to $49,425 taxable single / $98,850 joint), then 15%, then 20% at the very top. That's why your 'other income' input matters so much.