Understand how selling your home impacts your taxes and learn about the capital gains tax exclusion.
Article: 2 minutes
Updated: October 14, 2026 Published: May 6, 2015
By: USAA Reviewed by: Editorial contributors
You can potentially exclude up to $250,000 (single filers) or $500,000 (joint filers) of profit from the sale of your home from capital gains tax, provided you meet specific IRS requirements. To qualify, you generally must have owned and lived in the home for at least two of the five years prior to the sale, though various exceptions and complexities exist that may necessitate professional tax advice.
Congratulations! You sold your house at a nice profit.
But will the tax man take a big chunk of it? It often depends on the capital gains tax exclusion Opens in a New Window.
The IRS allows you to earn a substantial profit on the sale of your main home without having to pay taxes on it. Single filers can generally exclude up to $250,000 of home-sale gains from taxes, and those married and filing jointly can generally exclude as much as $500,000 under special rules.
To qualify for the maximum exclusions, the following must be true (though the first two don't have to occur at the same time):
You must own the property for at least two years — not necessarily continuous — during the five-year period ending on the date of the sale. (If you’re married and filing jointly, only one spouse has to meet the ownership test.)
You must live in the home as your main residence for at least two years — not necessarily continuous — during the five-year period ending on the date of the sale. (If you’re married and filing jointly, both spouses must meet the use test.)
During the two-year period ending on the date of the sale, you (and your spouse) didn't exclude a gain from the sale of another home.
These are the basic requirements, but several variables could impact if or how you can claim the exclusion.
For example, members of the military may be able to suspend the five-year period for ownership and use in certain situations. And taxpayers who don't fully meet the ownership and use tests still may be able to exclude a smaller amount of gain. And if you rented out the house, the rules get more complicated.
The number of potential nuances to the tax implications of home sales can be overwhelming, and you might still be confused even after paging through “Selling Your Home,” IRS Publication 523 Opens in a New Window. That's why it's wise to get professional tax help or use tax preparation software.
Get access to tax forms, documents, guides and more. Plus, USAA Perks® offers a discount on tax preparation services from TurboTax®.
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