Capital gain is simply the sale price minus what the house cost you, and for most homeowners the law wipes most or all of it off the tax bill. The planning happens before closing, not after. General information, not tax advice.
KEY FACTS FROM THIS GUIDE
- A written cash offer should show comps, repair estimate and margin, every time
- All closings run through licensed title companies (OH, TX) or closing attorneys (GA)
- Never sign a deed outside a closing; never pay a fee to sell your house
- Primary-residence gains up to $250,000/$500,000 are usually tax-free (IRC 121)
Calculate your real basis, it is higher than you think
Your basis is the purchase price plus closing costs plus every capital improvement over the years: the new roof, the remodeled bathroom, the fence. A $150,000 purchase with $30,000 of documented improvements is a $180,000 basis, cutting your taxable gain by $30,000. Dig out those receipts.
Time the sale around the 2-of-5-year rule
The $250,000/$500,000 exclusion needs 2 years of ownership and residence in the last 5. Moved out 4 years ago? You are inside the window. About to cross out of it? Closing a few months earlier can be worth tens of thousands.
A written offer costs nothing and decides nothing yet. Written numbers, licensed title company closings, zero pressure.
Married couples and divorce timing
Selling while married doubles the exclusion to $500,000. In a divorce, selling before finalization often produces the better joint tax outcome than each selling their half later. Coordinate the closing date with your attorney.
Inherited property is the easy case
Stepped-up basis means the clock and the gain reset at the date of death. A quick as-is sale near that value produces essentially no taxable gain.
When gains are genuinely taxable
Second homes, rentals and flips do not get the exclusion. Long-term rates (held over a year) run 0, 15 or 20 percent by income; rentals add depreciation recapture. If this is you, one hour with a CPA before signing beats any amount of reading after.
Get a free written cash offer here, or book a free consultation if you want to talk it through with a real person first.
