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As President Donald Trump weighs ending capital gains taxes on home sales to bolster the housing market, experts say it’s possible to lower your bill without legislative changes.
When asked about the idea this week in the Oval Office, Trump told reporters, “we’re thinking about that.”
Under current law, you can trigger capital gains taxes for a primary home sale if your profit exceeds $250,000 for single filers or $500,000 for married couples filing together.
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If your home sale profit is above $250,000 or $500,000, you pay capital gains tax of 0%, 15% or 20%, depending on your taxable income. (You calculate taxable income by subtracting the greater of the standard deduction or itemized deductions from adjusted gross income.)
Some higher earners also owe a 3.8% surcharge, known as net investment income tax, on home sales profits above the thresholds.
Who pays capital gains taxes on home sales
While home prices have soared over the past couple of decades, most sellers are under the $250,000 or $500,000 profit thresholds, experts say.
Those impacted are typically “older homeowners, people who have been in their house for many, many years,” said William McBride, chief economist at the Tax Foundation.
Roughly 34% of homeowners could exceed the $250,000 threshold for single filers, and 10% could be above the $500,000 limit for married couples filing jointly, according to a 2025 study from the National Association of Realtors, which has advocated for capital gains reform for home sales.
If you’re planning to sell your home and expect profits above the thresholds, here are some ways to lower your capital gains tax bill, experts say.
Reduce your home’s ‘cost basis’
Many home sellers don’t know they can trim capital gains by increasing their “cost basis,” or the home’s original purchase price, according to Boston-area certified financial planner Catherine Valega, founder of Green Bee Advisory. She’s also an enrolled agent, which is a tax license to practice before the IRS.
You can increase your basis by adding “capital improvements,” such as renovations that “improve the resale value of your home,” she said.
Some examples of these updates include room additions, landscaping, or adding new systems, according to the IRS.
However, capital improvements do not include repairs and maintenance that are “necessary to keep your home in good condition,” such as repainting, fixing leaks or replacing broken hardware, the agency said.
Regardless of whether the law changes, you should keep records of your home’s capital improvements, which could help lower taxes when you sell, Valega said.
