Will we owe capital gains tax when we sell our house?
Answered by Chris Deutsch, Founder & Editor
Licensed Minnesota Realtor #20382264 ·
The short answer
Most homeowners don't. Federal law excludes up to $250,000 of gain for a single filer, and $500,000 for a married couple. That applies to a primary residence you've owned and lived in for two of the last five years. Minnesota generally follows the same treatment. The gain is measured from what you paid plus qualifying improvements, not from zero. The taxable number is usually smaller than people fear.
On stage The 60-second answer
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The longer answer
Where it gets real: decades in one house. Twin Cities households who bought in the 80s or 90s can often clear the exclusion entirely. That's especially true after a spouse has died — though the timing rules around that are specific and deserve professional eyes. The unsung move: dig out records of every improvement you've made. The roof, the kitchen, the addition — each one raises your basis and shrinks the taxable gain.
I'm not your CPA, and this isn't tax advice. It's the list of questions to bring to your CPA: our basis, our exclusion, our timing. I bring the sale numbers; they bring the return.
The next department over
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