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Will I Owe Taxes If I Sell My House After 60? The Questions Everyone Is Asking Right Now

  • Posted In: Selling

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Some version of this question comes up almost every time I sit down with a homeowner over 60. We can be talking about a sunny condo near the grandkids or a single-story with a yard small enough to mow in ten minutes, and then the voice drops: “But what’s the tax going to be?”

It’s also what people are typing into Google and asking their AI assistants at midnight. Capital gains. The old over-55 rule. Whether Congress is about to change everything. Whether moving wipes out a Texas tax freeze.

So let’s answer them, plainly, one at a time. (I’m a Realtor®, not a CPA, so think of this as the conversation you have before you call your tax pro, so that call goes faster and costs less.)

First, the Good News Most People Don’t Know

If the home is your primary residence and you’ve owned and lived in it for at least two of the last five years, the IRS lets you exclude up to $250,000 of profit if you’re single, or $500,000 if you’re married filing jointly. You can read the fine print in IRS Publication 523.

Well-kept family home

And “profit” isn’t the sale price. It’s roughly the sale price, minus your selling costs, minus what you paid, minus the improvements you’ve made over the years. That new roof, the kitchen remodel, the addition? They all count.

Here’s a made-up example. You bought in 1998 for $180,000 and put $60,000 into improvements. You sell for $650,000 and spend $40,000 on closing costs. Your gain is about $370,000. Married? You likely owe nothing. Single? Roughly $120,000 would be taxable.

One more piece that matters to a lot of my clients: if your spouse has passed, the IRS generally lets you still use the full $500,000 exclusion if you sell within two years of their death and haven’t remarried. Details are in Publication 523, and it’s worth asking about before you set a timeline.

The Niskanen Center notes that the vast majority of households would owe no federal capital gains tax on a home sale under current law. So before you lose sleep, do the math.

“Wait, Isn’t There an Over-55 Exemption?”

There was. It was a one-time break for homeowners 55 and older, and it went away in 1997 when the current $250,000 and $500,000 rule replaced it. If someone at the club swears you get a special senior exemption, they’re about 29 years behind. (Bless them. We all still say “tape” a show.)

The flip side: those 1997 numbers have never been raised. Rep. Nicole Malliotakis’s office points out the exclusion amounts haven’t moved since they were set. Niskanen estimates that if they’d been indexed for inflation, they’d be over $500,000 for singles and $1 million for couples this year.

Should You Wait for Congress to Fix It?

This is the big one right now, and I understand why. There’s real movement:

  • The bipartisan More Homes on the Market Act would double the exclusion to $500,000 single and $1 million married, then index it to inflation. It had 174 co-sponsors as of August.
  • The Nest Egg Protection Act would let homeowners 65 and older who’ve owned their home at least 25 years exclude up to $1 million on sales from 2027 through 2030, according to this bill summary.
  • In August, the Washington Examiner reported the administration was weighing its own cut on home-sale gains.

Here’s the honest part: none of that is law today. The same bill summary notes a Brookings report found most senior households would see no benefit from a bigger exclusion, because they already fall under it. On the other side, the American Enterprise Institute estimates about 2 million homes owned by people over 65 exceed the current limit by an average of $310,000.

So which group are you in? If your gain is comfortably under the limit, waiting on Washington buys you nothing but another year of gutters. If you’re well over it, a conversation with your CPA about timing makes sense. Just don’t put your life on hold for a bill that might not pass.

And if you’ll be financing your next home, timing has another cost: Freddie Mac reported the 30-year fixed rate averaged 7.40% this week, up from 6.30% a year ago. Many of my clients sidestep that by buying their next place with cash from the sale.

The Texas Question Nobody Asks Until It’s Too Late

Texans, good news first: there’s no state income tax, so no state capital gains tax on the sale either.

Couple getting the keys with their Realtor

Now the part that trips people up. If you’re 65 or older with the over-65 homestead exemption, your school district taxes are capped. After voters approved the 2025 changes, the school exemption for over-65 homeowners is a combined $200,000, according to Ownwell’s 2026 summary.

Many people assume they lose the freeze when they move. You don’t have to. The Texas Comptroller explains that the ceiling can transfer to your new Texas home as a percentage. If your old freeze saved you 75%, your new home’s school taxes get the same 75% break. You request a transfer certificate from your old appraisal district and bring it when you file the homestead exemption on the new place. Skip that step and you start from scratch. As a recent 24/7 Wall St. piece put it, portability trips up almost everyone.

The Sneaky One: Your Medicare Premiums

If part of your gain is taxable, it counts as income that year. Medicare uses your income from two years earlier to decide whether you pay higher Part B and Part D premiums, as the Social Security Administration explains. A big sale in 2026 can show up as a surprise on your 2028 premiums. It’s not a reason not to sell. It’s a reason to plan.

When I talked with Ryan Garrison on the podcast about moving from the family home to the final home, we got into both the logistics and the emotions of that move. The tax math is one piece. It’s rarely the hardest piece, but it’s the one people let stall them the longest.

Your Three-Item Homework

Before you call your CPA, gather three things: the closing statement from when you bought, a list of major improvements (receipts if you have them, a best-guess list if you don’t), and a realistic estimate of what your home would sell for today. That last one I can help with, free and without pressure.

The tax question deserves an answer. It just doesn’t deserve to make the decision for you.

Robin McCoy

Realtor® | Senior Home Coach™

214.226.3770 | RelaxIGotThis.com | Robin@RelaxIGotThis.com

This article is general information, not tax or legal advice. Talk with a qualified tax professional about your situation.

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