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How to sidestep a tax bomb when selling your home

Key Points

  • With soaring prices and record home equity, you may expect a profit when selling property.

  • However, you may owe capital gains taxes if the windfall exceeds $250,000 for single sellers or $500,000 for married couples filing together.

  • You can reduce your bill by adding certain home improvements to the original purchase price, experts say.


With soaring prices and record home equity, you may expect a profit from selling your property. But the windfall may trigger an unexpected tax bill next April.

While home profits dipped slightly, the typical single-family seller still scored a $103,000 gross profit during the first quarter of 2022, according to ATTOM, a nationwide property database.

Although many skirt taxes with profits under the capital gains thresholds, others — especially long-time homeowners — may have a costly surprise, experts say.

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Home sales profits are considered capital gains, levied at federal rates of 0%, 15% or 20% in 2022, depending on taxable income.

Capital gains tax rates for 2022

Long-term capital gains rate Taxable income


Single filers


0% $0 to $41,675


15% $41,676 to $459,750


20% $459,751 or more


Married filing jointly


0% $0 to $83,350


15% $83,351 to $517,200


20% $517,201 or more

Source: IRS