When you sell your home, you may be liable for capital gains tax if it has appreciated in value over your ownership period.
Married homeowners pay no tax on the first $500,000 of profit on their home ($250,000 for single homeowners).
To qualify, you must meet both the ownership and use tests. This means you’ve owned and used the house as your main home for at least two of the last five years before the sale. You can only use the exemption once every two years.
When calculating your profit, you may also add the costs and cost basis for any home improvements, such as a new roof, windows, etc.
This content is for informational purposes only and is not a replacement for real-life advice regarding capital gains taxes when selling your home. Make sure to consult your tax professional if you have questions about how capital gains may apply in your situation.