Selling Your Home: What You Need to Know About Taxes in 2025

Selling your home is a big milestone but it can also bring questions about taxes. The good news? Many homeowners don’t pay tax on the profit from a home sale, thanks to the capital gains exclusion.

How the Exclusion Works

• If you’re single, you can exclude up to $250,000 of profit.

• If you’re married filing jointly, you can exclude up to $500,000 of profit.

Who Qualifies?

To qualify, you must:

1. Have lived in the home as your main residence for at least 2 of the last 5 years.

2. Not have claimed this exclusion on another home sale in the last 2 years.

Why Home Improvements Matter

When you sell, improvements you’ve made like replacing the roof, adding a deck, or remodeling your kitchen increase your “basis.” This can help reduce your taxable gain even if you go over the exclusion limit.

Example

Let’s say you bought your home for $200,000 and sold it for $350,000. Your profit is $150,000. Since this is under the $250,000 limit for a single filer, you would owe no federal tax on the gain.

Special Situations

Rules are different if:

• You inherited the home.

• You used the home as a rental before selling.

• You had a major life change (divorce, military move, etc.).

👉 Every case is unique so before you sell, make sure you understand how the rules apply to you.

At Chavez Tax Services, we help homeowners navigate these rules so you can make informed decisions and avoid surprises at tax time.