Will I Owe Taxes on the Sale of My House?

October 5, 2006

Q:  How do capital gains taxes work?  I want to sell my home, but have only been there for 18 months.  How much will I have to pay in capital gains tax?  Is two years the shortest time I can stay in my house without having to pay capital gains tax?

A:  Generally, the sale of your principal residence is not reported on your tax return unless you have a gain on the sale and you do not qualify to exclude the gain. 

Exclusion:  You can exclude from your income up to $250,000 ($500,000 for taxpayers filing Married Filing Joint) of the gain from the sale of your home if you meet the following conditions:

  • If you have owned and used the home as your principal residence for at least two out of the last five years prior to sale, and
  • You have not sold another home in the last two years.

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Kristine McKinley, CFP®, CPA, is the founding principal of Beacon Financial Advisors, LLC, an independent, fee-only financial planning firm located in Lee’s Summit, Missouri and serving the greater Kansas City area.

Kristine focuses on providing fee-only financial planning, investment advice, and tax preparation to individuals and families from all income levels.  About Us

In the News

Investment News – Kristine McKinley discusses the 0% Social Security COLA (for 2016) in No Social Security cost-of-living adjustment in 2016.

Kiplinger Magazine/NAPFA – Kristine McKinley answered reader’s tax questions during the 2013 Jump Start Your Retirement Plan Days sponsored by Kiplinger magazine and the NAPFA Consumer Education Foundation.