Skip to content

The Chicago Journal

How to Calculate Capital Gains Tax on a Home Sale in Chicago

The Chicago Journal Staff 2 on November 4, 2025

Selling a home can be both an exciting and stressful experience, especially when it comes to figuring out the financial side of things. One key aspect many homeowners need to understand is how to calculate capital gains tax on a home sale. Whether it’s a first-time sale or not, knowing how this tax works can help homeowners avoid surprises down the road. Let’s take a look at how capital gains tax on a home sale is calculated, what exemptions might apply, and how to navigate the process.

What is Capital Gains Tax on a Home Sale?

Capital gains tax is a tax levied on the profit made from the sale of an asset. When it comes to real estate, this tax applies to the profit made from selling a home. The tax amount depends on how long the home has been owned, the home’s sale price, and certain deductions or exemptions. Essentially, when a homeowner sells a property for more than what was paid for it, the difference is considered a capital gain, which could be taxable. The tax is based on whether the gain is long-term or short-term, and different rules apply to each.

How Do You Calculate Capital Gains Tax on a Home Sale?

Photo Credit: Unsplash.com

Calculating the capital gains tax on a home sale involves a few steps. First, it’s essential to determine the sale price of the home. From there, the cost basis needs to be calculated, which is generally the purchase price of the property plus any additional costs incurred during ownership. These costs may include home improvements, repairs, and other related expenses. The difference between the sale price and the cost basis represents the capital gain. This gain is then subject to either short-term or long-term capital gains tax, depending on how long the property has been owned.

To get a clearer picture, let’s break it down:

Determine the Sale Price: This is the amount the home was sold for, including any additional sales proceeds.

Calculate the Adjusted Cost Basis: The cost basis starts with the original purchase price but is adjusted to account for any improvements or selling costs that have been incurred. For instance, if you made significant home renovations or paid closing costs, these would increase your cost basis.

Subtract the Cost Basis from the Sale Price: The difference between the sale price and the adjusted cost basis is the capital gain. If the result is negative, it means there was no gain, or there was a loss on the sale.

Apply the Correct Capital Gains Tax Rate: Depending on how long the home was owned, this gain will either be taxed at a short-term or long-term rate. The long-term capital gains tax rate typically applies if the property was owned for more than a year.

What is the Difference Between Short-Term and Long-Term Capital Gains?

The length of time a property is owned has a significant impact on how the capital gain is taxed. Short-term capital gains apply to homes that are sold within one year of ownership, while long-term capital gains apply to homes owned for more than a year.

Short-term capital gains are taxed at ordinary income tax rates, which can be as high as 37% for high-income earners. Long-term capital gains, on the other hand, are taxed at a lower rate, usually 0%, 15%, or 20%, depending on the taxpayer’s income level. In some cases, additional taxes, such as the Net Investment Income Tax, may also apply, but this depends on the taxpayer’s total income.

Understanding the difference between these two types of gains can help a homeowner plan ahead, especially if they’re considering selling a home soon after purchasing it.

Are There Any Exemptions or Deductions Available?

Good news for homeowners: there are certain exemptions that could reduce or even eliminate the capital gains tax on the sale of a primary residence. The most well-known exemption is the Section 121 exclusion, which allows homeowners to exclude up to $250,000 of capital gains ($500,000 for married couples filing jointly) on the sale of their home, provided they meet specific requirements.

To qualify for this exemption, the following conditions must generally be met:

  • Ownership Test: The homeowner must have owned the home for at least two years within the five-year period leading up to the sale.
  • Use Test: The home must have been used as the primary residence for at least two years within the same five-year period.

If both of these conditions are satisfied, the homeowner can exclude up to $250,000 ($500,000 for married couples) of their capital gains from taxes. This can make a significant difference in reducing the tax burden, especially for those selling a home that has appreciated considerably in value.

It’s important to note that the exemption can only be used once every two years, so if a homeowner has already used this exclusion in the past two years, they may not qualify again for another sale until the waiting period has passed.

Are There Any Other Considerations When Selling a Home?

Several other factors can affect the capital gains tax calculation on the sale of a home. For example, if the home was used for business or rental purposes at any point during ownership, it may not qualify for the full Section 121 exclusion. The portion of the gain attributable to the rental or business use could be subject to taxation, even if the rest of the property qualifies for the exemption.

Additionally, homeowners who have made significant improvements or upgrades to their home may be able to increase their cost basis. This would, in turn, reduce the amount of taxable gain when the home is sold. Costs like new plumbing, major renovations, or even energy-efficient upgrades may be added to the cost basis, lowering the taxable capital gain.

Lastly, certain states have their own tax laws regarding capital gains. Some states do not have a state-level capital gains tax, while others have their own tax rates or exemptions. This can affect the overall tax liability when selling a home, so it’s always important to be aware of local tax rules.

What if the Home Sale Results in a Loss?

Photo Credit: Unsplash.com

In some cases, homeowners might sell their property for less than they originally paid for it, resulting in a capital loss. While this can be disappointing, it’s important to note that capital losses on the sale of a personal residence cannot be deducted for tax purposes. However, if a property was used for business or investment purposes, such as a rental property, any capital loss could potentially be used to offset other capital gains or even reduce taxable income.

Understanding how to calculate capital gains tax on a home sale can help homeowners manage their expectations and make informed decisions. With a solid grasp of the rules and available exemptions, it becomes easier to navigate the process, avoid surprises, and plan accordingly for the tax implications of selling a home.

The Hidden Costs of Families Raising a Neurodivergent Child May Be Overlooked

The Chicago Journal Staff on November 4, 2025

By: Jay Fedelman

When a family receives a diagnosis of autism or any other neurodivergent condition for their child, they enter a world that is often emotionally and financially overwhelming.

Michael Pereira, founder of The Autism Voyage, knows firsthand the significant impact of a diagnosis on a child’s life. “We lived through the uncertainty that follows a diagnosis,” he explains. “The endless appointments. The IEP meetings. The caregiving and therapy schedules. The complete restructuring of family life around a child’s needs, without losing focus of the whole family dynamic.”

That shift also included financial concerns. How much would therapy cost? Would insurance be enough to cover the healthcare needs of the child? What about the cost of future planning? All of these questions and more ran through Pereira’s head as the family set out to navigate their new normal together.

“These questions led me to become a financial professional,” says Pereira. “I wanted to be able to help families navigate insurance planning. The questions that we had also led me to start The Autism Voyage.”

The Autism Voyage is making a significant difference in the close-knit community of families raising neurodivergent children. As an information- and awareness-driven platform for these families, The Autism Voyage helps find answers through curated blog content, expert insights, and educational resources focused on daily living and building a team of professionals who can help them provide a quality life for their child.

The Unseen Costs of Raising a Child With Disabilities 

As Pereira and other parents of neurodivergent children can tell you, the unseen costs that follow a diagnosis can be significant and nearly impossible to anticipate. “Whether you’re a parent, sibling, grandparent, or other family member planning for a loved one’s future, the pressure to ‘figure it all out’ can be paralyzing,” Pereira shares.

Depending on the severity of the diagnosis, children may require specialized therapies and interventions that comprehensive healthcare plans may not fully cover. Speech therapy or Applied Behavior Analysis therapies can range from $60 to $200 per session (possibly more), and may not be considered medically necessary under specific insurance plans. These gaps leave families making tough decisions about their children’s care. If families are unprepared for out-of-pocket expenses, they may quickly become overwhelmed.

Health insurance gaps can quickly become a primary concern for caregivers of neurodivergent children. There can be significant exclusions, depending on one’s plan. These gaps and medical expenses can add up quickly, decimating budgets and disrupting care. Many families discover that programs like SSI and Medicaid, while potentially helpful, can be confusing and difficult to navigate without expert guidance.

The Employer Benefits Gap That Families Overlook

Beyond medical coverage, many families don’t realize how vulnerable they are, relying solely on employer benefits. Employer life insurance typically covers only one to two times annual salary, while disability coverage usually replaces just a percentage of base salary, excluding bonuses or commissions. These benefits often disappear if a parent changes jobs, is laid off, or retires.

“Families assume they’re protected because they have ‘life insurance through work,’ but they don’t realize how limited that coverage is or how easily it can vanish,” Pereira explains.

For self-employed families, the situation is more precarious. Self-employment is common among families with special needs due to the flexibility it offers for therapies and appointments, but it means starting without any safety net. “Self-employed parents are so focused on keeping their business afloat and their child’s care on track that proactive planning falls to the bottom of the list,” says Pereira. “They’re often the ones who need protection most.”

Planning for the Future

While navigating the present is often front and center, planning for the future can be financially daunting. As families grapple with guardianship, trusts, and the transition to adulthood, the costs of legal fees and other hidden expenses become clearer.

For Pereira, offering resources, education, and direction that may help families anticipate these costs. “The earlier a family begins having these conversations about financial issues, the more options they may have,” he says. “There are legal protections, financial tools, and community resources specifically designed to support individuals with disabilities, but many families don’t know they exist until it’s too late.”

Helping Bridge Financial Gaps

The Autism Voyage has emerged as a unique, family-centered resource and advocate for those navigating a world following diagnosis. Pereira left behind a career in corporate America to create this platform that blends empathy and practical advice. 

Pereira emphasizes the importance of building a team of professionals to help navigate financial, legal, and emotional challenges following diagnosis. For many families, half the battle is understanding where to start and knowing you need to build a support system and team.

“No single professional can address every aspect of planning for a loved one,” says Pereira. “The families who plan successfully do it with a collaborative team that includes estate attorneys, financial advisors, insurance professionals, and therapists, among others.”

Families who receive a diagnosis for their child often need help, even knowing which questions to ask. What therapies are covered under their insurance? How do they document needs? Where can they turn for expert help?

That’s where The Autism Voyage comes in. The platform offers curated blog posts that break down these issues step by step, addressing crucial topics such as insurance coverage gaps, caregiving burnout, and the sandwich generation. Pereira also shares his personal journey, practical insights, and parenting tips through a weekly newsletter.

Staying informed and seeking guidance from experts may help families anticipate future costs and prepare for what lies ahead.

Like the Pereira family discovered, the days, months, and years following a diagnosis of neurodivergence can be filled with questions and financial surprises. Expenses can be complex, multifaceted, and daunting. Through The Autism Voyage, Pereira has offered a roadmap for families that simplifies complex situations, prompts essential conversations, and connects families to trusted experts who may help bridge financial gaps.

How to Build a Running Routine That Fits Your Daily Life

The Chicago Journal Staff 2 on November 4, 2025

Creating a running routine that fits smoothly into a busy schedule can seem daunting, but it doesn’t have to be. By focusing on consistency and planning, it’s possible to incorporate running into even the most hectic days. Whether the goal is to improve health, stay in shape, or reduce stress, establishing a sustainable running routine can be a great way to achieve personal fitness objectives.

Start Small and Build Gradually

One of the most important things when developing a running routine is to start small. Trying to run long distances or intense intervals right away can lead to burnout or injury. Instead, the focus should be on creating a routine that feels manageable and can be sustained over time.

For those who are new to running, it’s advisable to begin with a walk-run method. This approach involves alternating between walking and running in short bursts. For example, a beginner might walk for four minutes and run for one minute, repeating this pattern for 20 to 30 minutes. Over time, the running intervals can be increased as stamina improves.

For experienced runners, a similar principle can be applied: consider starting with shorter, easy runs, focusing on recovery before increasing intensity. Gradually building up the distance and intensity over weeks and months will help develop endurance without overwhelming the body.

Choose the Right Time for Running

How to Build a Running Routine That Fits Your Daily Life

Photo Credit: Unsplash.com

Incorporating running into daily life requires careful consideration of time management. Many people find it helpful to establish a specific time each day for running, whether it’s early in the morning, during lunch breaks, or after work. The key is to find a time that works with the rest of the schedule, allowing the run to become part of the day’s routine.

For some, mornings are the best time to run. Running first thing helps get the workout done early, leaving the rest of the day open for other commitments. However, for others, running after work may be more realistic, offering a way to unwind after a busy day. The important part is consistency, once a running time is chosen, it should be maintained as often as possible to make running a habit.

Adapt Your Running Routine to Your Environment

A running routine doesn’t need to be tied to a specific location. If weather or terrain is a concern, consider varying the environment to make running more enjoyable and feasible. On days when it’s too hot, cold, or rainy outside, indoor options like treadmills can be a great alternative. Many gyms offer treadmills with various incline and speed settings that mimic outdoor running conditions.

On the other hand, outdoor runners might find enjoyment in exploring new routes or tracks. Varying the scenery can keep the routine interesting, and it can also provide a change of pace for the body, preventing overuse injuries. Choosing routes that fit personal preferences and geographic convenience, such as paths through parks or neighborhoods, can make the experience feel less like a chore and more like an enjoyable activity.

Stay Flexible and Adaptable

Life is unpredictable, and there will be days when running doesn’t seem possible. This is where flexibility becomes a vital part of maintaining a running routine. Rather than forcing a run on days that are packed with obligations, it can be helpful to adapt the plan. For instance, if an evening run is skipped, it might be possible to do a short run in the morning or take a brisk walk during lunch.

Other alternatives include swapping a running day for a cross-training workout, such as swimming, cycling, or strength training, to allow the body to recover while still staying active. Flexibility in the routine allows individuals to maintain their fitness levels without feeling stressed by the idea of missing a session. Over time, the important factor will be consistency, not perfection.

Track Progress and Set Realistic Goals

Setting clear, achievable goals can keep the motivation high and make running more rewarding. Whether the goal is to run a specific distance, achieve a certain time, or simply build consistency, having something to work toward adds purpose to each run.

Tracking progress can also be highly beneficial. Many runners use apps or journals to log their distances, times, and how they feel after each run. Reviewing these logs periodically can provide valuable insights into how endurance has improved or which areas might need more focus. Additionally, seeing progress on paper or on a screen can boost motivation, reinforcing the effort put into maintaining a routine.

Setting realistic goals is also key to staying on track. While it’s exciting to have ambitious aspirations, it’s important to pace progress to avoid frustration. Smaller, incremental goals help runners celebrate successes along the way, contributing to long-term success. Whether it’s running a little further or shaving seconds off a time, small improvements can lead to bigger achievements.

Overcome Common Challenges

There are several common challenges that runners face, but overcoming them is part of building a routine that fits daily life. A few common obstacles include lack of motivation, physical fatigue, and time constraints. Each of these can be managed by employing simple strategies.

To combat lack of motivation, many runners find it helpful to pair running with something enjoyable. Listening to music, podcasts, or audiobooks can make the activity more engaging. Others might join local running groups or participate in virtual challenges to stay motivated and connected with other runners.

When physical fatigue becomes an issue, recovery is essential. Ensuring that there’s enough rest between runs, stretching before and after, and incorporating rest days can help keep the body strong and ready for the next run. It’s also crucial to listen to the body: if injury or overexertion occurs, taking time off from running may be necessary to prevent further damage.

Time constraints can be tackled by choosing shorter running routes or using time-efficient methods like interval running. If a full run can’t be fit into the day, a 15 to 20-minute session is better than skipping it altogether. Small efforts, consistently made, add up over time.

How to Build a Running Routine That Fits Your Daily Life

Photo Credit: Unsplash.com

Building a running routine that fits into daily life is possible with thoughtful planning and realistic expectations. By starting small, adapting to personal schedules and environments, staying flexible, and setting achievable goals, anyone can develop a routine that contributes to physical and mental well-being. The key is consistency, making running a regular part of the day, even if it’s just for a few minutes, can lead to lasting benefits over time.

 

How Do Operational Costs Influence Profit Margins?

The Chicago Journal Staff 2 on November 4, 2025

How operational costs influence profit margins is an important consideration for many businesses. Operational costs include the everyday expenses necessary to keep a company running. These expenses often encompass wages, rent, utilities, materials, maintenance, and other ongoing charges.

Profit margins represent the difference between a company’s revenue and these expenses. When operational costs rise, margins tend to narrow unless a business adjusts prices or improves efficiency. Conversely, controlling or reducing operational costs can contribute to healthier profit margins. However, the relationship is rarely straightforward and depends on many factors, including industry characteristics and market conditions.

How Do Fixed and Variable Operational Costs Differ in Their Effect on Profit Margins?

Operational costs are generally split into fixed and variable categories, each impacting profit margins in different ways. Fixed costs remain consistent regardless of production or sales levels. These often include rent or salaries for permanent staff. Because fixed costs must be paid regardless of revenue, they set a baseline expense that can pressure margins if sales decline.

Variable costs fluctuate with production volume. Expenses like raw materials, packaging, and hourly wages rise or fall depending on business activity. Efficient management of variable costs can help maintain margins when demand shifts.

An example of this dynamic is seen in manufacturing. When production slows, fixed costs still need to be covered, but variable costs drop. If sales fall too far, profit margins may suffer because fixed costs weigh more heavily on each unit sold.

In What Ways Do Operational Costs Affect Pricing Decisions?

Pricing decisions are closely tied to operational costs. Companies must ensure prices cover expenses while also considering competitive positioning and customer willingness to pay.

Higher operational costs may require raising prices to maintain profit margins. Yet in highly competitive markets, increasing prices risks losing customers, so businesses often seek ways to manage costs before adjusting pricing. Some sectors with thin margins have limited flexibility to pass on cost increases, creating pressure to find operational efficiencies instead.

Businesses may adopt different pricing strategies depending on cost structures. A cost-plus approach calculates prices by adding a markup to operational expenses. Alternatively, market-based pricing emphasizes consumer demand and competitor pricing, sometimes leading to compromises on margins.

What Impact Do Fluctuations in Operational Costs Have on Profit Margins?

Changes in operational costs, such as increases in raw material prices or labor expenses, can significantly affect profit margins. For instance, rising energy costs can add to manufacturing or logistics expenses, squeezing margins if not offset by revenue gains.

Supply chain disruptions may increase transportation or storage costs, creating additional challenges. Some companies might respond by cutting other costs or streamlining processes to compensate. However, these adjustments are not always sufficient to preserve previous margin levels.

In service industries, increases in wages or benefits may raise operational expenses, influencing profitability. Conversely, businesses with more flexible cost structures may adapt more easily to these fluctuations. Technologies like real-time tracking have helped some companies monitor logistics and inventory more precisely, allowing for faster adjustments and reduced waste.

How Does Operational Efficiency Relate to Profit Margins?

Operational efficiency refers to how well a company uses resources to produce goods or services. Improving efficiency can reduce operational costs and help protect or improve profit margins.

How Do Operational Costs Influence Profit Margins

Photo Credit: Unsplash.com

Investments in technology or process improvements can increase output or reduce waste without raising costs significantly. Automation, for example, may decrease labor expenses while maintaining quality and speed.

Continual evaluation of workflows and cost drivers enables companies to identify opportunities for improvement. Firms that adapt operations in response to cost pressures may sustain healthier margins over time.

How Do Industry Factors Influence the Relationship Between Operational Costs and Profit Margins?

The connection between operational costs and profit margins varies by industry due to differences in capital intensity, cost structures, and competitive environments.

Industries such as manufacturing or utilities often have high fixed costs, making them sensitive to fluctuations in sales volume. Profit margins can be narrow, and cost increases may quickly reduce profitability.

In contrast, service industries might have higher variable costs and more flexibility in adjusting expenses relative to demand. Retail businesses balance inventory management, staffing, and real estate costs, influencing how operational expenses affect margins.

These industry-specific factors guide how companies manage costs and pricing to maintain profitability. Long-term planning also plays a role, net worth by age can influence how business owners approach operational decisions, especially when aligning financial goals with retirement or reinvestment strategies.

What Are Some Examples of Operational Costs Affecting Profit Margins?

In a manufacturing setting, increases in raw materials like metals or plastics can raise production costs. A rise in electricity prices may add to operating expenses for factories. Unless these costs are passed on to customers through price adjustments or absorbed by efficiencies, profit margins can shrink.

A retail business may face higher rental and staffing costs due to inflation. If customer traffic remains steady but expenses grow, the margin on each sale diminishes. Some retailers might respond by negotiating leases or optimizing labor scheduling to control costs.

A service company could encounter rising employee benefits expenses. Balancing competitive compensation with budget constraints may require restructuring service delivery or leveraging technology to maintain margins.

How Can Businesses Respond to Changes in Operational Costs?

Responding to shifts in operational costs often involves a combination of cost management and strategic adjustments. Companies might seek alternative suppliers or bulk purchasing discounts to reduce material expenses.

Process optimization, such as lean manufacturing techniques, can help reduce waste and inefficiencies. Adopting automation or digital tools may lower labor costs or improve accuracy.

Adjusting product or service offerings to focus on higher-margin items is another approach. Pricing strategies can be reviewed, but must consider market demand and competitive positioning.

Ultimately, decisions must balance cost containment with maintaining quality and customer satisfaction.

What Risks Arise From Poor Management of Operational Costs?

Ineffective control of operational costs can erode profit margins, reducing funds available for investment or debt servicing. Persistent cost overruns may force price increases that customers resist or reduce the company’s competitiveness.

Financial pressure from unmanaged costs can lead to cutbacks in workforce or product quality, potentially damaging reputation and market share.

Firms attentive to operational cost management tend to navigate economic fluctuations more successfully, preserving margins and stability.

Why Is Understanding Operational Costs Critical to Financial Health?

A thorough understanding of operational costs allows businesses to make informed decisions on budgeting, pricing, and growth. Profit margins reflect the success of managing these costs relative to revenue.

Breaking down cost components reveals areas for potential savings and vulnerabilities. This insight informs more accurate forecasting and resource allocation. Appreciating how operational costs influence margins supports long-term sustainability and business resilience.