Capital gains tax

The tax placed on the profit made from selling a home

The IRS taxes your capital gain, which is the profit you make when you sell your home or other investment.

As long as you have lived in your home for at least 2 of the 5 years prior to sale, you can benefit from the following capital gains tax breaks: if you are single or widowed, you can pocket the first $250,000 gain tax-free. If you are married, you take away the first $500,000 without paying any tax.

Any profit left over will be taxed at a 20% rate.