Do I Have to Pay Capital Gains Tax When I Sell My House

Do I Have to Pay Capital Gains Tax When I Sell My House

Do I Have to Pay Capital Gains Tax When I Sell My House

This is a common question. Under current laws, if you sell your principal home (the home you live in) and make a profit, you can exclude $250,000 of that profit from your taxable income. And that’s just the exclusion for an individual. Married couples can exclude up to $500,000 (if both spouses each meet the ownership and use tests below). So, depending on how much of a profit you make on the sale, you could theoretically have no capital gains tax bill at all.

I say ‘theoretically’ because in order to claim the maximum exclusion, you have to pass what the IRS calls the ownership and use tests.

This means:

• You have to have owned the house for two years.

• You have to have lived in the house as your principal residence for two out of the last five years, ending on the date of the sale.

There are a few exceptions to these rules—for instance, if you had to move before your 2-year anniversary of owning the home due to job change or because you experienced what the IRS designates as an “unforeseen circumstance,” such as a divorce or natural disaster. In these circumstances the IRS will allow you to prorate the exclusion. As always, talk with your accountant to determine if you qualify or not.

Lastly, and what some would consider the most interesting way to avoid paying capital gains, is that the two years residency doesn’t have to be consecutive—crazy huh?- you just have to have lived in your home for a total of 24 months out of the five years leading up to the sale.

Now, that’s something to thank Uncle Sam for!

Angel Cutshall Headshot
Phone: 904-237-6390
Dated: August 5th 2019
Views: 143
About Angel: ...

Property Search

RSS Feed

View our latest blog posts in your RSS reader. Click here to access. RSS

Search Blog

Recent Blogs

The 7 Craziest Laws and HOA Rules - The 7 Craziest Laws and HOA
Do I Have to Pay Capital Gains Tax When I Sell My House - Do I Have to Pay Capital Gains Tax
Quick Links For Great Finding More Deals - Some  QUICK LINKS to 

Saved Properties

This is a list of your favorite properties. We will email you if a property is reduced or leaves the market.

Click 'Save' to add a property to this list.

Register / Login

New & returning visitors please enter your information to login.

By clicking 'register' you are agreeing to our terms of use & giving us expressed written consent to contact you.

Questions? Comments? Complaints?

This message will go directly to the head of our team.

Location & Address

La Rosa Realty, North Florida
7406 Fullerton Street
Jacksonville, FL