How do you calculate my home sale exclusion?
First, we determined if you qualified for the full exclusion of $250,000 ($500,000 if Married Filing Jointly or a qualified surviving spouse). Then we took the information you gave us for the price you paid for your home, any improvements or local assessments, and any depreciation you took for your home in prior years to calculate your basis in the home. We calculated your net sales price by subtracting your sales expenses from the sales price. Then we subtracted your basis in the home from your net sales price to determine the gain on the sale of your home.
Generally, your excluded amount will be the smaller of the gain on the sale of your home or the amount you qualify to exclude.
If you told us that you took depreciation for your home and you had a gain on the sale of your home, the amount of depreciation you took must be recaptured as taxable gain and cannot be excluded from your income. In this case, your exclusion will be the smaller of the amount you qualify to exclude or any gain remaining after recapturing the depreciation.
Generally, your excluded amount will be the smaller of the gain on the sale of your home or the amount you qualify to exclude.
If you told us that you took depreciation for your home and you had a gain on the sale of your home, the amount of depreciation you took must be recaptured as taxable gain and cannot be excluded from your income. In this case, your exclusion will be the smaller of the amount you qualify to exclude or any gain remaining after recapturing the depreciation.
