This calculator computes your gain net of selling costs, not off the raw sale price — amount realized = sale price minus commission, closing costs and concessions. On a $500,000 sale with $350,000 basis, that produces a $117,500 gain, entirely absorbed by this calculator's own $250,000 single-filer exclusion figure. Above that figure, the taxable portion is what's left after subtracting it, not the whole gain.
How the gain is computed — and why it isn't sale price minus basis
The instinct is to subtract what you paid from what you're selling for. This calculator does something more precise: it first reduces the sale price by commission, closing costs and any buyer concessions to get an amount realized, and only then subtracts your cost basis. Selling costs come off the gain before the exclusion is ever applied, which is why two sellers with identical sale prices and bases can owe different tax if their selling costs differ.
Raise the sale price to $900,000 with the same basis and cost percentages and the arithmetic changes shape: amount realized $841,500, gross gain $491,500 — now above the $250,000 figure by $241,500. At a 15% capital-gains rate this calculator estimates $36,225 of tax, leaving net proceeds after tax of $605,275, or about 67.3% of the sale price kept. The $500,000 example above keeps 41.9% of the sale price — a lower percentage despite owing zero tax, because a $250,000 mortgage payoff consumes a much larger share of a smaller sale.
How this calculator gates the exclusion
The exclusion isn't applied automatically. The calculator only subtracts it when you confirm the ownership-and-residence question on the form; leave it unchecked and the entire gain is run through the tax line, because the tool has no way to verify your history and defaults to the conservative answer rather than assuming you qualify.
It's also worth being precise about what changes at the exclusion figure and what doesn't: the exclusion reduces the taxable gain, not the selling-cost total, the mortgage payoff, or the net-proceeds-before-tax figure above it. A seller who clears the exclusion entirely can still see a large gap between sale price and cash in hand — that gap is commission, closing costs, and the mortgage, none of which the exclusion touches.
Two things in the arithmetic that surprise people
- ·A sale can produce a negative result. When selling costs plus the mortgage payoff exceed the sale price, net proceeds before tax comes out negative — meaning cash has to be brought to the closing table rather than collected from it. The calculator flags this rather than silently showing a negative number without comment.
- ·The percentage-of-sale-price note needs a sale price to mean anything. Selling costs are also shown as a share of the sale price, and that share only exists when there's a sale price to divide by — at $0, the calculator holds the note back rather than displaying a meaningless percentage.
Both are small implementation details, but they're the difference between a calculator that degrades honestly at the edges and one that quietly prints a nonsense figure when an input is left blank or zero.
Methodology
All figures are computed directly from this calculator's own arithmetic: amount realized (sale price minus commission, closing costs and concessions), gross gain (amount realized minus cost basis), and taxable gain (gross gain minus the exclusion figure this calculator applies when the ownership question is confirmed). No IRS ownership-and-use test is asserted here beyond what this calculator's own gate represents — that determination should be confirmed with a tax professional or the IRS's own guidance on the sale of a home.