🧾 Will I owe capital gains tax when I sell my home?

Deciding to sell your home requires understanding your potential capital gains tax. The IRS offers a massive tax break for primary residences, but missing the cutoff by a single month can cost you tens of thousands of dollars. This calculator estimates your taxable gain and helps you decide if waiting to sell makes financial sense.

To find your gain, start with your sale price and subtract selling costs. Then subtract your cost basis, which is your original purchase price plus any major capital improvements.

Keeping receipts for new roofs, renovations, and additions is essential because those improvements raise your basis and shrink your taxable gain.

The IRS requires you to meet both the ownership and use tests to claim the full exclusion. You must own and live in the home as your primary residence for at least 24 months out of the 5 years ending on the date of sale.

Waiting to hit that 24-month mark can make up to $500,000 of your gain completely tax-free if you file jointly. The IRS notes you generally cannot claim this exclusion if you used it for another home sale in the past two years.

If your gain exceeds your allowable exclusion, the remainder is subject to capital gains tax. For most households, the federal long-term capital gains rate is 15%, though it can reach 20% for high earners.

This tool simplifies a few complex tax situations. We exclude partial exclusions for work or health moves, depreciation recapture if you ever rented the home, state taxes, and the Net Investment Income Tax.

For further related reading, check out:

• Topic no. 701, Sale of your home | Internal Revenue Service
• Publication 523 (2025), Selling Your Home | Internal Revenue Service