If you owned and lived in the home for 2 out of the last 5 years, then you may qualify for the home sale exclusion which would exclude up to $250k ($500k if married filing jointly) of the sale of your home. In order to qualify you must not have used the home sale exclusion in the past 2 years.
If you would sell before the 2 years and do not have any exceptions to the home sale rule, the rest of your income will play a part in the tax rate, but the home sale profit may be subject to capital gains of a rate between 0% and 20%. The capital gains rates are as follows based on income. The brackets will change each year.
- Zero percent rate for the following income
- $44,625 for single or MFS
- $59,750 for HOH
- $89,250 for Married Filing Jointly
- Fifteen percent for income more than above but less than below
- $276,900 for MFS
- $492,300 for Single
- $523,050 for Head of Household
- $553,850 for Married Filing Jointly
- Twenty percent for the amount that your taxable income is over the 15% level.
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