04 Oct When I sell my home, is it considered a capital gain?

Q. I know tax is paid on the gain of the sale of the house which is over the exempted amount. However, a house is a long-term investment that I have lived in for 25 years. Can the tax be considered a capital gain tax at a lower rate of tax?
— Homeowner

A. Sounds like you’re thinking of selling your home.

Good luck if you do.

On the tax side, generally, you can exclude $250,000 of gain if you’re single, or $500,000 if you’re married, from the sale of your home if it was your principal residence for 24 of the prior 60 months, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

The months do not have to be consecutive, he said.

You say you lived in your home for 25 years, so the exclusion applies to you, he said.

If you have more than $250,000/$500,000 in gain, then the balance is taxable as a long-term capital gain on your federal return and as ordinary income for New Jersey purposes, Kiely said.

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This story was originally published in October 2024.

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