Understanding Capital Gains Taxes on Home Sales for Retirement Planning

When selling your primary home and making a $750,000 profit, you may owe capital gains taxes depending on various factors. The IRS taxes home sales as gains or losses on investments, with capital gains rates applying if you owned the property for one year or more. However, there is a capital gains exemption for primary residences that allows married couples to exclude up to $500,000 in profits from taxes, and individuals can exclude up to $250,000. Calculating your capital gains taxes involves considering factors such as marital status, total household income, duration of ownership, and adjusted cost basis. It is advisable to consult a financial advisor for assistance in managing your tax liability.