This is general information, not tax advice. Talk to a CPA or tax professional about your specific situation.
What is capital gains tax on a home sale?
Capital gains tax applies to the profit when you sell a property for more than your cost basis (roughly what you paid plus improvements). Whether you owe depends on how much you gained, how long you owned the home, and whether it was your primary residence.
The primary-residence exclusion (the big one)
If the home was your main residence for at least 2 of the last 5 years, federal rules generally let you exclude up to $250,000 of gain if single, or $500,000 if married filing jointly. Many homeowners owe no federal capital gains tax at all because of this exclusion.
Connecticut adds its own income tax
Connecticut taxes capital gains as part of state income tax. The federal primary-residence exclusion generally flows through, but the state treatment can differ — a CT tax professional can confirm what applies to you.
Inherited and investment properties
Inherited homes usually get a stepped-up basis to the date-of-death value, which often erases most of the gain if you sell soon after. Rental/investment properties do not get the primary-residence exclusion, though a 1031 exchange may defer the tax.
Ways homeowners reduce the gain
- Add the cost of capital improvements to your basis
- Include selling costs
- Meet the 2-of-5-year residence test
- Keep records of what you paid and what you put in
Thinking about selling in Hartford County?
Sell 2 Us buys houses for cash across Hartford County — inherited, rental, or primary homes — as-is, with no fees or commissions. Call (860) 288-3536 for a free, no-obligation offer, or visit our home page. For tax specifics, we will always tell you to check with your CPA.