More home sales trigger capital gains tax. Here’s how it works and how to avoid it.

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Americans are increasingly facing capital gains tax when they sell their homes. In 2023, “roughly 8%” of home sales were hit with capital gains tax, which marks “more than double the share in 2019,” said The Wall Street Journal, citing real estate data firm CoreLogic.

This uptick is a result of rapidly rising home values, coupled with the fact “that, unlike other tax provisions, this exemption is not adjusted with inflation,” said The New York Times. Because the limit on how much profit from a home sale is exempt has not been indexed for inflation, “a $500,000 profit when the law was introduced in 1997 is equal to only about $262,000 today,” said the Times, based on the same CoreLogic study.

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