Neither 10% nor 15%, this is the tax rate you will have to pay if you sell your house in 2025
The tax you’ll pay when selling your house is known as capital gains tax. For most homeowners, there’s good news: you may not have to pay any tax at all.
When it comes to selling your house in 2025, the tax implications might surprise you. Contrary to popular belief, the tax rate isn’t a fixed 10% or 15%. Instead, it depends on various factors, including your income, filing status, and how long you’ve owned the property.
The tax you’ll pay when selling your house is known as capital gains tax.
Capital gains tax applies to the profit you make from selling an asset, such as stocks or property. In the United States, the tax rate depends on how long you’ve held the asset and your income level. If you sell an investment within a year of buying it then you are subject to a 37% tax rate.
For most homeowners, there’s good news: you may not have to pay any tax at all.
Tax exemptions when you sell your house
If you’ve lived in your home for at least two of the last five years, you can exclude a significant portion of your profit from capital gains tax. Single filers can exclude up to $250,000, while married couples filing jointly can exclude up to $500,000.
To determine your taxable gain, subtract your home’s cost basis (purchase price plus improvements) from the sale price. If the result is less than the exemption amount, you won’t owe any capital gains tax.
If your gain exceeds the exemption, you’ll pay capital gains tax on the excess. The rates for 2025 are:
- 0% for single filers with income up to $48,350 ($96,700 for married filing jointly)
- 15% for single filers with income between $48,351 and $533,400 ($96,701 to $600,050 for married filing jointly)
- 20% for single filers with income above $533,401 ($600,051 for married filing jointly)
Short-term gains, property owned for less than a year, are taxed as ordinary income, which in most cases is much higher than the capital gains rate.
To minimize your tax payment, consider keeping detailed records of home improvements to increase your cost basis. Timing your sale to ensure you meet the two-year residency requirement is also crucial
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