Do I Need to Pay Capital Gains Tax When I Sell My Port Washington Home?

Do you have to pay capital gains tax when selling your Port Washington home?
Maybe — it depends on how long you’ve owned the home, whether it was your primary residence, and the size of your profit. The IRS and New York State both have rules that determine whether you’ll owe taxes.

Federal Capital Gains Tax Rules

• Primary Residence Exemption: If you’ve lived in your Port Washington home for at least 2 of the last 5 years, you may exclude up to $250,000 of profit if you’re single, or $500,000 if you’re married filing jointly.

• Profits Beyond the Exemption: If your gain exceeds the exemption, the rest may be subject to capital gains tax. Rates vary based on your income.

• Investment Properties: If the home wasn’t your primary residence (such as a rental), the exemption generally doesn’t apply.

New York State Capital Gains Considerations

• New York follows federal rules for calculating capital gains.

• However, you’ll also pay state income tax on any taxable gain. Rates depend on your income bracket.

Strategies to Reduce or Avoid Taxes

1. Track Improvements: Keep records of home improvements, as these costs can be added to your home’s basis, lowering taxable gain.

2. Use the Exemption Wisely: Make sure you meet the residency requirement to qualify.

3. 1031 Exchange (for Investment Properties): If selling a rental, you may defer taxes by reinvesting proceeds in another qualifying property.

Example

• You bought your Port Washington home for $600,000 and sell it for $1,000,000.

• Your profit is $400,000.

• If married filing jointly, $500,000 is excluded — meaning you owe no federal capital gains tax.

• If single, you exclude $250,000 and may owe taxes on the remaining $150,000.

Why Work With Professionals

Capital gains tax rules can be complex. Eric Berman, REALTOR, provides market expertise and connects sellers with tax professionals who can:

• Evaluate your potential tax liability

• Explore strategies to minimize taxes

• Ensure compliance with both federal and state rules

Bottom Line

You may or may not owe capital gains tax when selling your Port Washington home. The answer depends on your ownership, residency, and profit. Always consult a qualified tax professional before listing.

Thinking about selling your Port Washington home? Contact Eric Berman for market guidance and referrals to trusted local tax experts.

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Do you have to pay capital gains tax when selling your Port Washington home? Learn the rules, exemptions, and strategies to minimize taxes with REALTOR Eric Berman.