Q: How are capital gains calculated on the sale of a home? The cap gains reported in the Federal Worksheet are hard to reconcile with the math on capital gains.
Answer: You are mixing nominal and real dollars in your calculation. You need to use either 2015 real dollars or nominal 2022 dollars for all amounts in the calculation. You can't mix proceeds in real 2015 dollars with the nominal basis and exclusion in 2022 dollars in the same calculation.
Please see my spreadsheet, including the cell formulas, for the calculation in all real and all nominal dollars.
We assume that the exclusion amount will be increased sometime in the future, otherwise it won't be worth much in 20 or 30 years. Specifically, we assume that it will be indexed to inflation starting in 3 years.
If the exclusion is not increased, then your capital gains will be $795,046.