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Selling a home can trigger capital gains taxes on the profit. However, significant exclusions exist for primary residences that allow many sellers to pay little or no tax. Understanding the rules before closing helps with financial planning.

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Capital Gains Exclusion

The primary residence exclusion is the most valuable tax benefit for homeowners selling their home.
  • Single filers: Up to $250,000 excluded
  • Married filing jointly: Up to $500,000 excluded
Gains within these limits are completely tax-free. No tax owed, no reporting required in most cases.
To qualify for full exclusion, must meet both tests during the 5-year period ending on sale date:
  • Ownership test: Owned the home for at least 2 years (730 days)
  • Use test: Lived in the home as primary residence for at least 2 years (730 days)
The 2 years don’t need to be continuous. Total of 24 months within the 5-year period qualifies.
To claim full $500,000 exclusion:
  • File joint return
  • At least one spouse meets ownership test
  • Both spouses meet use test
  • Neither spouse used exclusion in prior 2 years
Can only use exclusion once every 2 years. If you sold another home and claimed exclusion within the past 2 years, you cannot claim again.

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When You Owe Taxes

If your gain exceeds $250,000 (single) or $500,000 (married), the excess is taxable. Long-term capital gains rates (0%, 15%, or 20%) apply if you owned the property more than one year.
If you owned or lived in the home less than 2 years, a partial exclusion may be available if the sale was due to job relocation, health reasons, or unforeseen circumstances.
If you claimed the exclusion on another home sale within the past 2 years, you cannot claim it again.
If part of the home was used for rental or business, gain must be allocated. The exclusion applies only to the residential portion. Depreciation recapture may also apply.

Tax Implications: Selling

Detailed guide to capital gains, exclusions, and timing strategies

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Calculating Net Proceeds

Net proceeds are what you actually receive after all costs are deducted from the sale price.
  • Real estate agent commission
  • Title insurance and settlement fees
  • Transfer taxes
  • Recording fees
  • Prorated property taxes
  • HOA payoffs and prorations
  • Mortgage payoff
  • Repairs agreed to in contract
  • Home warranty (if seller pays)
  • Sale price: $450,000
  • Minus commission (5%): $22,500
  • Minus closing costs: $8,000
  • Minus mortgage payoff: $280,000
  • Net proceeds: $139,500
Your listing agent and title company can provide estimated net proceeds before closing.
Selling costs reduce your taxable gain (not just your proceeds):
  • Agent commissions
  • Legal fees
  • Title insurance
  • Transfer taxes
  • Staging costs
  • Repairs required by contract

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Timing Considerations

If you’re close to meeting ownership or use tests, waiting to sell can save significant taxes.Example: Owned 22 months, planning to sell. Waiting 2 more months qualifies for 250,000exclusion.At15250,000 exclusion. At 15% capital gains rate, waiting could save 37,500.
Gain is taxed in the year the sale closes. If your income varies year to year, timing the closing can affect your tax rate.
  • Higher income year: Consider delaying closing to January
  • Lower income year: Consider closing before December 31

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Moving Timeline and Coordination

Coordinate your move with your closing date to ensure a smooth transition.
  • Research moving companies
  • Get at least 3 estimates
  • Create inventory of belongings
  • Start decluttering and decide what to keep, sell, or donate
  • Book moving company
  • Confirm estimate in writing
  • Begin packing non-essentials
  • Notify important contacts of address change
  • Confirm move details with company
  • Continue packing
  • Arrange mail forwarding
  • Transfer or establish utilities at new address
  • Finish packing
  • Confirm arrival time with movers
  • Clean home for final walkthrough
  • Gather keys, remotes, and access devices

The Moving Process

Detailed timeline, packing, and delivery guide

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Choosing a Moving Company

Get at least 3 estimates. In-home or video surveys are more accurate than phone estimates. Understand whether estimates are binding (guaranteed price) or non-binding (can increase).
For interstate moves, verify the company has valid USDOT and MC numbers through the FMCSA database. Local movers should have state licensing where required.
Read reviews focusing on damage claims, pricing accuracy, and communication. Check FMCSA complaint history for interstate movers.
Basic coverage (60 cents per pound) provides minimal protection. Full value protection costs more but covers actual replacement value. Review options before moving day.

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