Anyone experienced with capital gains tax?

Hi,

I am possibly going to be selling my SFH to downsize to a townhome and I am trying to figure out the capital gains tax. I have tried the calculators online and don't feel like they are accounting for the 250K over original selling price you are allowed, if I am not mistaken.

Anyone recently sell a house and know how to figure it out? I am guessing it is;

Original sale price of home + 250 + improvement costs + sale costs = total money to be taxed

The online calculators do not seem to be figuring in the 250K over original sales that you are allowed if you have resided there for at least 2 years, which I have. This is my primary residence and has been for almost 8 years.

Thanks for any help or info!

-T

 

If memory serves….

Original purchase price + improvements = Basis

Current sale price - Basis - 250k allowance - selling fees= Gain

Gain - Capital Gain Taxes= Net

 

Thank you!

 

It is simply this: you do not pay tax on the first $250k of profit over your cost basis when you sell the home IF at the time of the sale you lived in it as your primary residence for 2 of the previous 5 years.

Your cost basis is what you have paid for the house + any fixed improvements (like a renovation, replaced water heater, etc). Many people keep receipts for home repairs or renovations for this reason. It increases your cost basis which will decrease the amount of profit you make when you sell the home, which decreases tax due if your profit is over the tax-free limit.

The big kicker is that if you're married filing jointly, the amount you take tax-free is $500k.