Capital Gains for Home Sellers

Real Estate Agent with Keller Williams Real Estate RS307443

They say that two things are constants in life: death and taxes. Many people are questioning which one is worse these days. Taxes are a daily part of life, so it’s important that we pay attention to our rights as citizens and make sure that we don’t pay more than our fair share. 

Being an expert in real estate sales, I am always asked about tax liabilities for homeowners. My intent is for this article to clear up any confusion in that area.

The good news is that in most cases, your home is exempt from paying any capital gains taxes. Capital gains tax is applied when you sell an asset (stocks, real estate) for more than what you paid for the item. So when it comes to your primary residence, there are some exemptions from paying this tax.

  1. You must have occupied the home as your primary residence for 2 years out of the last 5 years.
  2. You have not excluded any capital gains taxes from other home sales in the last two years

If you are single, you can exclude up to $250,000 from capital gains. And if you are married, $500,000 when filing jointly. This represents a huge break in taxes and is definitely becoming more and more important in this market where homeowners are gaining back equity in their homes.

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Comments (1)

Stefan Winter
Real Estate in IL & NV | Owner of Real Estate Web Tech | Daily Vlogger - Las Vegas, NV
Owner - Winter Group & Real Estate Web Tech

I find no matter what I am paying more than my fair share in taxes, sadly I guess to keep what is left of my income I have too. 

Great explanation on capital gains, I find most homeowners dont have to worry too much since any profit is usually used to purchase a new house right away. For investors it is something important to know.

Jun 09, 2015 07:08 AM