rjs
Level 15
Level 15

Deductions & credits

If you are not able to exclude the entire profit, calculating the tax is a bit complicated. It's a long-term capital gain, which is taxed at lower rates than ordinary income. But the rate that applies depends on how much other income you have in the year of the sale, and it's possible that not all of the profit is taxed at the same rate. If your total taxable income, including the taxable part of the profit on the home, is low enough, some or all of the profit might be taxed at 0%.


If you have some taxable profit, you can easily get a quick estimate of the tax by using TaxCaster. Enter all your income and other information except the profit on the sale of your home, and see what your estimated refund or amount owed is. Then enter the taxable profit on the home, after subtracting the exclusion, as long-term gain, and see how the estimated refund or amount owed changes.