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Do I Have to Pay Capital Gains Tax When I Sell My Home?
(Santa Barbara Real Estate - Seller Guide)
Capital gains tax is one of the most common questions we hear from Santa Barbara sellers. The answer depends on whether the home is your primary residence, your profit, and your tax situation.
What “Capital Gains” Means
Capital gain is generally the difference between what you sell for and your cost basis (purchase price plus certain improvements, minus certain adjustments). Your CPA can calculate this precisely.
The Primary Residence Exclusion (Often the Big One)
If the home is your primary residence, you may be able to exclude up to:
● $250,000 of gain (single)
● $500,000 of gain (married filing jointly) if you meet the typical requirement of owning and living in the home for at least 2 of the last 5 years (with certain exceptions and special circumstances).
IRS explanation: https://www.irs.gov/taxtopics/tc701
When Capital Gains Tax Is More Likely
● Second homes and vacation properties
● Rental/investment properties (may involve depreciation recapture)
● Homes sold before meeting the 2-of-5 residency/ownership guideline
● Significant appreciation beyond the exclusion limits
What Sellers Should Do Before Listing
1. Estimate your likely sale price and net proceeds
2. Gather improvement records (roof, remodels, systems)
3. Speak with a tax professional about your specific situation
At Etherton Real Estate Group, we help Santa Barbara sellers plan proactively and coordinate a clear sale strategy so there are no surprises.
Free Santa Barbara home valuation: https://www.ethertonrealestate.com/home_value Learn more about Justin: https://www.ethertonrealestate.com/agent-profile/justin-etherton-13844616
(General information only; consult a CPA/tax professional.)
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