Tax on Sale of a Home

Most homeowners can avoid tax on the sale of their home. But for some — usually those selling for a profit greater than $250,000 (or $500,000 for certain married couples), those who have used their homes in business, or those who haven't held the home long enough (generally, more than 2 years), there can be a taxable gain. A loss on the sale of a home is not deductible.

The worksheet below will figure your tax, if any. Rules for the $250,000/$500,000 exclusion are at the end.

Part 1 - Gain (or Loss) on Sale
Selling price of home:
Selling Expenses:
Adjusted basis of home sold:

Part 2: Exclusion and Taxable Gain
Enter any depreciation allowed or allowable on the property for periods after May 6, 1997. If none, enter zero:
If you qualify to exclude gain on the sale, enter your maximum exclusion. (See Maximum Amount of Exclusion below.) If you do not qualify to exclude gain, enter 0:
 

Results:
This is the gain (or loss) on the sale:  
This is your exclusion:
This is your taxable gain:
This is capital gain subject to the Unrecaptured Section 1250 Gain rate (25%):


Maximum Amount of Exclusion
You can exclude gain on the sale of your main home up to:

1) $250,000 if you meet the ownership and use tests (see below), or

2) $500,000 if you meet the ownership and use tests and all of the following are true:

a) You are married and file a joint return for the year,
b) Either you or your spouse meets the ownership test,
c) Both you and your spouse meet the use test, and
d) During the 2-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home.

Ownership and Use Tests
During the 5-year period ending on the date of the sale, you must have:

1) Owned the home for at least 2 years (the ownership test), and

2) Lived in the home as your main home for at least 2 years (the use test).

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