the gain is defined as:
1) Sales price less selling costs
2) Cost basis plus improvements
1) - 2) = capital gain
if that answer is less than $250,000 (individual), there is no tax to be paid.
but depending on your income level, there can be a twist! even if the gain is greater than $250,000 and then you subtract $250,000, there is still something left. But at the lower income levels, the capital gains tax is zero! if your ordinary income plus the capital gains is less than $39k. the capital gains rate is zero.
