What is capital gains tax on real estate?

Capital gains tax is the tax paid on the difference between the purchase price of real estate and the price for which it is sold, explains SFGate. The amount is adjusted for a variety of exemptions, tax breaks and deductions.

Capital gains tax is calculated separately from the tax on regular income, and it's calculated at a different rate, says SFGate. Most states tax capital gains as well.

If a taxpayer has a gain from the sale of his main home, he qualifies to exclude up to 250,000 of that gain from his income, explains the Internal Revenue Service. Married and filing joint return taxpayers qualify for an exclusion of up to $500,000.