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I Sold My Home This Year. Do I Owe Tax on the Capital Gain?

Written by Jaclyn Greenberg
Published Feb 19, 2026 - [Updated Feb 23, 2026]
2 min read
Reviewed by Karis Fedor, CPA Susan Yeatts, EA

Key takeaways

Most homeowners don’t owe capital gains tax if their profit is under $250,000 ($500,000 if married filing jointly).
To qualify, you must have owned and lived in the home for at least 2 of the last 5 years.
Some sellers may qualify for a partial exclusion if they sold due to job, health, or unforeseen circumstances

Key takeaways Step 1: Calculate the profit on the sale of your home Step 2: Check if you qualify for the exclusion Step 3: Check if you qualify for a partial exclusion Step 4: Keep your documentation Ready to file?

I sold my home and assumed I’d owe taxes — but most homeowners don’t. Before you panic, here’s how the $250,000 home sale exclusion works and how to figure out if you qualify.

Do you have to pay tax on the sale of your home?

Step 1: Calculate the profit on the sale of your home

Start with the price you sold your home for.

Then subtract:

Selling costs (real estate commission, attorney fees)
Repairs made within 90 days before closing
The original purchase price of your home
The cost of major improvements (new roof, remodeled kitchen, pool, HVAC)

Keep in mind: routine repairs typically don’t increase your home’s basis, but major improvements that add value or extend the life of your home usually do.

What’s left is your gain. Most homeowners won’t owe taxes if that gain is within the exclusion limits.

Step 2: Check if you qualify for the exclusion

To qualify for the home sale exclusion, all of the following must apply:

You owned the home for at least 2 of the last 5 years.
You lived in your home as your primary residence for at least 2 of the last 5 years.
Single filers can exclude up to $250,000 in profit; married couples filing jointly can exclude up to $500,000.
You generally can’t use the exclusion more than once every two years.

If your entire gain is excluded, you may not need to report the sale on your tax return — unless you receive Form 1099-S.

Step 3: Check if you qualify for a partial exclusion

If you had to sell before meeting the full two-year requirement because of a job relocation, health issue, or unforeseen circumstance, you may still qualify for a reduced exclusion. The amount you can exclude is typically prorated based on how long you lived in the home.