07 · §121 BRIEF
The math at every tier.
Section 121 is the single biggest line item between sale price and net. Math, not promises.
The rule.
Purchased 2019-05-24 for $725K. Primary residence since. MFJ = $500K exclusion cap. Both ownership and use tests pass.
Verified basis only. Excludes one in-progress improvement scope ($13,710) not yet finalized. Not tax advice. Confirm basis with your CPA.
Improvements basis. Receipts on file.
Eight §121-eligible categories. Every line backed by a receipt or invoice already in the file.
| Category | Amount |
|---|---|
| Kitchen | $10,348.56 |
| Roof | $4,500.00 |
| HVAC | $1,500.00 |
| Solar | $13,907.60 |
| Exterior | $1,500.00 |
| Bath | $1,002.25 |
| Flooring | $1,496.00 |
| Painting | $6,580.00 |
| Total documented improvements basis | $40,834.41 |
Solar financing: confirm the service address on file matches the property before closing.
Granite countertops: confirm $2,250 balance paid (3/19/26 invoice showed $2,250 still due).
Painting contractor: provide paid receipt to convert from quote to confirmed basis line.
Adjusted basis.
| Purchase price (2019-05-24) | $725,000.00 |
| Documented improvements basis | $40,834.41 |
| Adjusted basis | $765,834.41 |
Every additional $1K of documented basis at Strategic saves $25 to $50 federal plus $25 Arizona. Receipts win.
Tax at each tier.
| Tier | Price | Gain | Taxable | Fed 15% | Fed 20% | AZ 2.5% |
|---|---|---|---|---|---|---|
| Velocity | $1,295,000 | $529,166 | $29,166 | $4,375 | $5,833 | $729 |
| Strategic | $1,425,000 | $659,166 | $159,166 | $23,875 | $31,833 | $3,979 |
| Aggressive | $1,575,000 | $809,166 | $309,166 | $46,375 | $61,833 | $7,729 |
Taxable = gain minus $500K MFJ exclusion. Strategic is the recommended tier; Aggressive moves $150K of gain into taxable territory.
Two questions for the table.
- Convert the three flagged items? The solar service address confirmation, the granite balance receipt, and the painting contractor’s paid receipt each tighten the basis line and reduce taxable gain.
- 1031 or rental-conversion in play? Briefly converting before sale changes the §121 calculus. Timing-sensitive. STR brief →
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