From sale price to cash in your account
The sale price is not what you receive. At closing, the title or escrow company pays everyone else first: your agents, the closing costs you agreed to pay, any credits you gave the buyer, your mortgage lender and any other liens on the property. What is left is your net proceeds.
Net proceeds = sale price − commission − seller closing costs − buyer credits − repairs and prep − mortgage payoff − other liens
- Commission: what you pay your listing agent and, if you agree to it, the buyer's agent. Since the National Association of Realtors settlement practice changes of August 2024, buyer-agent pay is negotiated separately and is no longer offered through the MLS, so enter the total you expect to pay.
- Seller closing costs: title insurance for the buyer (in many areas), escrow or attorney fees, recording fees, transfer taxes, prorated property tax and HOA charges. They vary widely by state and county; your title company or agent can give an estimate.
- Mortgage payoff: request a payoff statement from your lender. It is usually a little higher than the balance on your monthly statement because it adds interest up to the payoff date.
Worked example
A homeowner sells for $450,000, pays 5.5% commission and 1.5% closing costs, spends $3,000 on repairs and staging, and owes $220,000 on the mortgage.
- Commission: $24,750; closing costs: $6,750.
- Amount realized: 450,000 − 24,750 − 6,750 = $418,500.
- Net proceeds: 418,500 − 3,000 − 220,000 = $195,500.
If the home is worth only $300,000 and the mortgage payoff is $290,000, the same percentages leave the seller about $14,000 short: money would have to be brought to closing.
Will you owe tax on the gain?
Under section 121 of the Internal Revenue Code, you can exclude up to $250,000 of gain on the sale of your main home, or $500,000 if married filing jointly, if you meet the ownership and use tests: generally you owned the home and lived in it as your main home for at least two of the five years before the sale, and you have not used the exclusion on another home in the two years before. Partial exclusions and exceptions exist, for example for some moves for work or health; IRS Publication 523 explains them.
Gain = amount realized − adjusted basis
Adjusted basis = purchase price + certain purchase closing costs + improvements (− depreciation claimed, if any)
In the example, the home was bought for $280,000 and improved by $30,000, a basis of $310,000. The gain is 418,500 − 310,000 = $108,500, fully covered by a single filer's exclusion. Bought long ago for $120,000 with $20,000 of improvements, the gain would be $278,500: a single seller could exclude $250,000 and might owe tax on $28,500, while a married couple filing jointly could exclude all of it. A rental or second home gets no exclusion, so the whole $278,500 could be taxable.
Taxable gain on a home owned more than a year is usually a long-term capital gain, taxed at 0%, 15% or 20% depending on income, and some higher-income sellers also owe the 3.8% net investment income tax. Improvements (such as an addition, a new roof or a remodel) raise your basis; ordinary repairs and maintenance do not. Keep receipts. A loss on the sale of your personal home is not deductible.
Tips to keep more of the sale price
- Ask for a written net sheet from your agent or title company and compare it with this estimate.
- Commissions and some closing costs are negotiable.
- Time the sale so you meet the two-year use test if you are close to it.
- Gather records of improvements to support your basis.
This estimate is for planning. Exact closing figures come from the settlement statement, and tax questions about your situation are best answered by a tax professional.
Frequently asked questions
How do I calculate net proceeds from selling my house?
Start with the sale price and subtract agent commission, seller closing costs, credits to the buyer, repairs or staging you pay for, the mortgage payoff and any other liens.
How much are seller closing costs?
They vary by state and county because of transfer taxes and local customs about who pays title and escrow fees. Ask a title company or agent for a net sheet for your area.
Do I pay tax when I sell my house?
Usually not on the first $250,000 of gain ($500,000 married filing jointly) if you owned and lived in the home as your main home for at least two of the last five years. Gain above that may be taxed as a capital gain.
What counts toward my cost basis?
The purchase price, certain closing costs from when you bought, and capital improvements such as additions, a new roof or a kitchen remodel. Routine repairs do not count.
Why is my mortgage payoff higher than my balance?
The payoff includes interest from your last payment up to the payoff date and sometimes small fees, so request a payoff statement close to closing.
Sources
- Internal Revenue Service. Publication 523, Selling Your Home.
- Internal Revenue Service. Topic no. 701, Sale of your home.
- Internal Revenue Service. Topic no. 409, Capital gains and losses.
- Internal Revenue Service. Topic no. 559, Net investment income tax.
- Consumer Financial Protection Bureau. What is a payoff amount?
Last reviewed 3 November 2026. Results are estimates; see our disclaimer.