You Probably Do Not Need to Worry About Capital Gains Tax When You Sell Your Home

If it's been a while since you last sold a home, you might still think you need to purchase a new home afterwards to avoid paying capital gains taxes. That used to be true -- but it changed back in 1997.

Today, most homeowners benefit from a much simpler and more generous rule:

• If you're single, you can exclude up to $250,000 in capital gains.
    
• If you're married filing jointly, you can exclude up to $500,000.

This exemption applies to your gain, not the total sales price -- and you don't need to buy another home to qualify. You just need to have owned and lived in the home for two of the past five years.

Why it matters

In most cases, especially in our local market, homeowners don't make more than $250K - $500K in profit when they sell -- which usually means no capital gains taxes are due.

So if you're thinking about selling and wondering about tax implications, the answer is simple:

Chances are, you're in the clear.

There is a slight caveat if you used a portion of your home for business or rental purposes, so if you did, touch base with me and I can explain that a bit more fully or refer you to a great tax professional.