Selling a primary home doesn’t automatically trigger tax on the full gain — Section 121 excludes a large chunk of it for anyone who meets the ownership and use tests.
How it works
Up to $250,000 of gain (single) or $500,000 (married filing jointly) is excluded from tax if the home was owned and used as a main home for at least 2 of the last 5 years. Whatever gain remains above the exclusion is taxable, typically at capital gains rates.
What this does not include
This calculator doesn’t determine eligibility itself — the 2-of-5-year ownership and use tests, and the reduced exclusion available for a move driven by employment, health, or unforeseen circumstances, all have their own specific rules this calculator takes as a given (via the tests-met percentage) rather than evaluates.
How to use this calculator
- Enter the realized gain and filing status.
- Enter 100% if the ownership and use tests are fully met, or a lower percentage for a reduced exclusion.
Frequently asked questions
Can I use this exclusion more than once?
Generally once every 2 years — you can’t exclude gain on a second home sale within 2 years of using the exclusion on a prior sale.
What if I don’t meet the 2-of-5-year test?
A reduced exclusion may still be available if the sale was driven by a change in employment, health, or unforeseen circumstances — this calculator’s tests-met percentage input can model that reduced case.
Does this apply to rental or investment property?
No — Section 121 applies to a main home, not investment property; this site’s 1031 exchange calculator covers the analogous deferral mechanism for investment real estate.
