What Are Capital Gains Taxes in Real Estate?

Capital gains tax applies to the profit made when you sell a property for more than you paid. However, the IRS offers an exemption for primary residences — up to $250,000 for single filers or $500,000 for married couples, provided you’ve lived in the home for at least two of the past five years.

In my experience, planning ahead for potential tax implications is key, especially for investors. Strategies like 1031 exchanges can defer taxes on investment property gains, allowing continued portfolio growth without immediate tax impact. Always consult a tax professional before making major sale decisions.