Understanding Capital Gains Tax When Selling Your Home
💡 What Is Capital Gains Tax?
Capital gains tax is the tax you pay on the profit from selling your home — that’s the difference between what you paid for it (your “basis”) and what you sell it for.
🏠 When It Applies
If the home you’re selling has been your primary residence for at least two of the last five years, you may be able to exclude up to $250,000 of profit from taxes ($500,000 if married filing jointly).
That means many homeowners won’t owe anything — but if it was a second home, rental, or vacation property, different rules may apply.
📊 Example
If you bought your home for $200,000 and sell it for $350,000, your gain is $150,000.
If it’s your primary residence, that profit typically falls under the exclusion — no capital gains tax owed.
🧾 How to Reduce What You Owe
✔️ Keep records of major home improvements (they can increase your cost basis).
✔️ Consider timing your sale strategically if you own multiple properties.
✔️ Always consult your tax professional before making any financial decisions related to your home sale.
🤝 Need Local Guidance?
At The Heffron Group REALTORS®, we can help you prepare your home for the market and connect you with trusted local professionals to ensure you have all the right information — before you list.
📞 Contact us today to start the conversation.