Home sale vs investment property
Real estate capital gains depend on whether the property is your primary residence or an investment. For a qualifying primary residence, Section 121 may exclude up to $250,000 of gain ($500,000 if married filing jointly) if ownership and use tests are met — generally living in the home as your main residence for at least two of the five years before the sale.
Investment and rental property do not get the same exclusion. Previously claimed depreciation may be taxed as unrecaptured Section 1250 gain at a maximum 25% federal rate, with remaining appreciation often taxed at standard long-term rates if the holding period qualifies. Selling expenses and capital improvements adjust basis and can reduce taxable gain.
State treatment varies widely. Some states piggyback on federal concepts; others have their own conformity rules for exclusions and recapture. Always model both federal and state layers, then confirm with a real-estate-aware CPA for large sales, 1031 exchanges, or installment sales.
Use the calculator with the real-estate asset tab selected, enter proceeds and basis, and review methodology for how our estimate approximates these rules. This is not a substitute for Form 4797 / Schedule D preparation.
Also see
Other calculators, how we model the numbers, and IRS Topic 409.