Key Takeaways
- When you sell your main home, the IRS subtracts your selling costs, such as agents’ commissions, from the price before it works out your gain.
- A single 70-year-old who sells a home for $700,000 after buying it for $300,000 owes $22,500 in federal tax on the gain past the $250,000 exclusion if the costs are left out. With $40,000 of costs counted, the tax is $16,500.
- A married couple filing jointly gets a $500,000 exclusion, so the same sale would leave them with no taxable gain at all.
- You can count only the costs you can document, so keep the closing statement and the bills for everything you paid to sell.
Selling a house costs a lot more than most owners plan for. Sellers who listed in the past three years spent an average of nearly $82,000 to sell, up 22% from 2025, according to Clever Real Estate’s survey.
That stings. But if you’ve owned your home long enough for the gain to run past the IRS’s $250,000 exclusion, I have some good news: a big part of those costs comes off the gain the IRS taxes. Designer Ken Fulk is the latest long-time owner to sell. He just found a buyer for the San Francisco home he and his husband owned for 16 years, reportedly for $9,995,000. They paid $1.9 million for it in 2010, according to The Real Deal.
A $400,000 gain on a $300,000 house
Let’s take a hypothetical: say you’re 70 and single, with $50,000 of other taxable income this year, after your deductions. You bought your home for $300,000, you’ve owned it and lived in it for at least two of the last five years, and you sell it for $700,000.
That’s a $400,000 gain. The first $250,000 is tax-free, which leaves $150,000 for the IRS to tax.
But you didn’t walk away with $700,000. The agents took their commissions, and the closing statement came with its own list of charges. Say all of that came to $40,000, which is hardly a stretch. Clever expects sellers to pay about 5.46% of the sale price in commissions, or $38,220 on a $700,000 home before a single closing cost.
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The IRS taxes what you actually got
When you sell your main home, the IRS works out your gain as the amount realized minus your adjusted basis, and your selling expenses come off the amount realized. Publication 523 calls them the costs directly associated with selling your home. Its worksheet for them lists commissions, advertising fees and legal fees, among others. You can’t deduct transfer or stamp taxes you pay as the seller on their own, but the IRS lets you count them as selling expenses too.
Then there’s the exclusion: $250,000 for a single filer and $500,000 on a joint return, for a home you’ve owned and lived in for at least 24 months of the last five years, according to the IRS’s Topic 701. Once your gain is past it, every dollar of selling costs comes straight off the part the IRS taxes.
$6,000 less in tax
Here’s the same sale under 2026’s capital gains rates, once with the costs left out and once with them counted:
| Metric | Costs left out | $40,000 of costs counted |
|---|---|---|
| Amount realized | $700,000 | $660,000 |
| Gain | $400,000 | $360,000 |
| Taxable gain past the $250,000 exclusion | $150,000 | $110,000 |
| Federal tax at 15% | $22,500 | $16,500 |
For a single filer in 2026, the 0% rate covers taxable income up to $49,450 and the 15% rate runs up to $545,500, with the gain counted in that income, according to the IRS’s Rev. Proc. 2025-32. Your $50,000 of other income already fills the 0% band. Even with the full $150,000 gain added, your taxable income comes to $200,000. So every dollar of the gain is taxed at 15%, and every dollar of selling costs saves you 15 cents.
That’s $6,000 back for $40,000 of costs you were paying anyway. Not bad at all.
Of course, none of this matters until your gain clears the exclusion. A married couple filing jointly gets $500,000, so the same $400,000 gain would leave them with no taxable gain at all, costs or no costs. Single sellers with a big gain have the most riding on their paperwork.
Keep the closing statement
The IRS counts only the costs directly tied to the sale, so you’ll want the records from the sale on hand. Keep your closing statement and the bills for anything else you paid to sell, such as advertising or legal fees. Keep proof of any transfer taxes you paid as the seller, too. Publication 523’s worksheet adds them up for you.
The same publication puts improvements you made over the years, and the closing costs you paid when you bought, into your adjusted basis. That’s a separate figure from your selling expenses, and a higher basis means a smaller gain. So the receipts from a kitchen redo years ago are worth digging out too.
Watch next year’s brackets
The 0% and 15% cutoffs above are 2026’s, and the IRS sets new ones for each tax year, so if you sell next year, next year’s figures apply. A much bigger gain would put part of it at 20%. With $50,000 of other income, you’d hit that rate only past $495,500 of taxable gain, where your taxable income crosses 2026’s $545,500 line. Above that point, each dollar of selling costs saves 20 cents.
At the end of the day, $6,000 is a lot of money to hand the IRS for want of a closing statement. If you’re single and your gain will run past $250,000, I’d treat that paperwork like a tax document, because for you, it is one.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
