CAPITAL GAINS TAX EXCLUSION
When selling a primary residence you've owned for at least two years, you can exclude up to $250,000 in gains as a single filer or $500,000 as a married couple by deducting these expenses.
PARTIAL EXCLUSION
If you have lived in your home less than two years but have a qualified reason to sell, you may be eligible to exclude a portion of your taxable gain. Qualifying criteria include needing to sell due to a death in the family, job loss, damages to your home by a natural disaster, or a significant life change, such as a divorce.
QUALIFYING DEDUCTIONS
If you've made any major home renovations, you may be able to lower your capital gains tax by deducting these expenses. Keep in mind that improvements to the house must increase its overall resale value, and not simply be for regular upkeep and maintenance.
OFFSET GAINS WITH LOSSES
Tax-loss harvesting is a strategy that enables you to realize an investment loss in one area of your portfolio and use it to offset capital gains from a home sale. For example, a home seller who makes a $300,000 profit while realizing a loss of $40,000 by selling another asset may be able to offset that loss against the profit to reduce the capital gains tax.