I'm Downsizing and Netting $640k From My Home Sale. How Can I Avoid Capital Gains Taxes?

Core Insights - Selling a longtime home and downsizing in retirement is a common practice, with potential capital gains tax implications depending on the profit from the sale [1][2] Capital Gains Tax Overview - Capital gains tax applies to profits from the sale of investments, including real estate, stocks, and bonds [3] - Long-term capital gains rates are generally lower than ordinary income tax rates, with rates of 0%, 15%, or 20% based on income [4] Home Sale Exclusions - Homeowners can exclude some or all of the gain from taxation if they lived in the home for at least two of the last five years [5] - A married couple filing jointly can exclude up to $500,000 in capital gains from a home sale, while individuals can exclude up to $250,000 [7][8] Tax Implications for Home Sales - For a home sale netting $640,000, a married couple could owe $21,000 in federal taxes after exclusions, while an individual could owe $58,500 [8]