What Are the Tax Implications for Seniors Selling Their Home?

Selling a home later in life can feel like a major milestone — and it often comes with important financial questions. For seniors on Long Island, understanding the potential tax implications of selling your home is key to planning confidently for your next chapter. While every situation is unique, knowing the basics helps you prepare before speaking with your tax professional.

Understanding Capital Gains Tax

When you sell your home for more than you paid, that profit is called a capital gain. In some cases, part of that gain may be taxable — but most senior homeowners qualify for major exclusions.

If you’ve lived in your home for at least two of the past five years, you may be eligible to exclude up to:

• $250,000 of profit if filing as an individual

• $500,000 of profit if married and filing jointly

That means many seniors sell their longtime homes without owing any capital gains tax at all.

How Your Home’s Cost Basis Affects Taxes

Your “cost basis” is the total of what you originally paid plus improvements made over the years — like a new roof, kitchen remodel, or addition. Keeping detailed records helps reduce your taxable gain later.

For example:
If you bought your home for $200,000 and spent $100,000 on upgrades, your cost basis becomes $300,000. Selling for $700,000 would mean a gain of $400,000 — and with the $500,000 exclusion (for joint filers), that gain would be tax-free.

Special Considerations for Seniors

Seniors should also consider:

• Timing: Selling early in the year gives you time to plan for any potential tax effects.

• Inheritance vs. Sale: If you pass your home to heirs, they may receive a “stepped-up basis,” which can reduce taxes for them.

• Medical deductions: In some cases, expenses related to medical care or assisted living may offset taxable income.

Because every situation differs, it’s best to review your full financial picture with a certified tax professional.

State and Local Taxes on Long Island

In addition to federal taxes, remember that New York State may have its own tax implications depending on your income and residency status. While Long Island property values are high, exemptions and deductions often protect seniors from unexpected costs.

An SRES® REALTOR like Eric Berman can coordinate with your accountant or financial advisor to ensure your real-estate decisions align with your overall plan.

Plan Ahead for Peace of Mind

Tax rules don’t have to be intimidating. By understanding your potential exposure, keeping good records, and working with professionals, you can enjoy the rewards of your home sale — without financial surprises.

FAQs

Do seniors have to pay capital gains tax when selling their home?
Often not. Most qualify for the $250K/$500K exclusion. Confirm eligibility with your tax advisor and Eric Berman REALTOR.

What improvements count toward my cost basis?
Permanent upgrades like additions or new systems usually qualify. Learn how to calculate with help from Eric Berman REALTOR.

Does New York State charge extra taxes when selling?
It depends on your income and property type. Get location-specific insight from Eric Berman REALTOR.

Should seniors sell before moving into assisted living for tax reasons?
Sometimes — but the right timing depends on income, deductions, and care expenses. Discuss strategy with Eric Berman REALTOR.

Who can help seniors handle both taxes and real-estate decisions?
A team approach works best — your REALTOR, accountant, and attorney. Start your plan with Eric Berman REALTOR.

Blog URL:
https://www.theericbermanteam.com/blog/what-are-the-tax-implications-for-seniors-selling-their-home

Eric Berman, REALTOR®
Compass Greater NY
917-225-8596
eric@ericbermanre.com
www.theericbermanteam.com