Section 121 home sale exclusion ($250,000 / $500,000)

If you owned and used a home as your primary residence for at least two of the five years before the sale, you may exclude up to $250,000 of gain from federal tax, or up to $500,000 if you are married filing jointly and both spouses meet the use test (with additional ownership rules). Gain above the exclusion is generally taxed as a capital gain.

The exclusion does not apply the same way to investment or rental property. Depreciation previously claimed on a home that was rented can still be recaptured. Partial exclusions may be available after certain work, health, or unforeseen-circumstance moves.

Select real estate, choose primary residence, and indicate whether you meet the Section 121 tests. The engine applies the exclusion cap for your filing status, then taxes remaining gain. State treatment of the exclusion can differ — California and other states may not fully conform.

This is a planning estimate, not a closing statement. Large home sales, 1031 exchanges, and mixed-use property need a real-estate-aware CPA. Investment property owners looking to defer gain should read our 1031 exchange guide.