Tax Deductions When Selling a Home

Maximizing Your Profits —

The Smart Seller’s Guide to Tax Savings in Collin County

Selling your home in Frisco, Plano, McKinney, or Allen can be an exciting milestone, but it also raises an important question: How much of your hard-earned equity can you keep?

Understanding which expenses are deductible—and which gains may be excluded—can help you retain more profit when tax season arrives.

At Cindy Coggins Realty Group, we help homeowners navigate both the sale and the financial aftermath with confidence. Here’s a clear, IRS-aligned guide to what you can deduct when selling a home in North Texas.

1️⃣ Exclusion of Gain on Sale of Your Primary Home

One of the most powerful tax breaks available to homeowners is the capital gain exclusion. If you’ve lived in your home for at least two of the last five years, you may exclude up to $250,000 of profit from taxation ($500,000 if married filing jointly).

This rule, known as the Section 121 Exclusion, applies only to your primary residence. You can generally claim it once every two years. (IRS Publication 523: Selling Your Home, 2023)

2️⃣ Deductible Selling Costs

When calculating your gain or loss, you can reduce your taxable profit by deducting transaction-related expenses such as:

• Real-estate agent commissions
• Legal and escrow fees
• Title insurance and transfer taxes
• Advertising, staging, or photography expenses
• Inspection and survey costs



Each of these directly offsets your sale proceeds—lowering taxable gain and increasing what you keep. (IRS Topic 701, 2023)

3️⃣ Home Improvements vs. Repairs

Upgrades that add value, extend life, or adapt use—like kitchen remodels, bathroom additions, new roofs, or solar panels—can be added to your cost basis, effectively reducing taxable gain.

Routine maintenance (painting, fixing leaks, replacing filters) generally does not qualify.

Keep receipts and documentation of all major improvements; the IRS recommends maintaining these for several years after the sale. (IRS Publication 523, 2023)

4️⃣ Property Taxes and Mortgage Interest



While property taxes and mortgage interest don’t directly offset your capital gain, they remain itemized deductions on your federal return:

• Deduct property taxes paid up to the date of closing.
• Deduct mortgage interest accrued before payoff—including conventional, FHA, or home-equity loans.

These deductions help minimize your overall taxable income. (IRS Publication 530: Tax Information for Homeowners, 2023)

5️⃣ Selling Investment or Second Homes

If you’re selling a rental or vacation property, the Section 121 exclusion usually does not apply—but several other benefits remain:

• You can still deduct selling costs.
• You may offset gains with past depreciation taken (though depreciation recapture rules apply).
• Consider a 1031 exchange to defer taxes by reinvesting in another investment property.
  (IRS Like-Kind Exchanges, 2023)

Final Thought

Selling a home is both an emotional and financial milestone. By knowing which deductions apply and how to structure your sale strategically, you can protect your profits and plan with confidence.

At Cindy Coggins Realty Group, we combine local market expertise with practical financial awareness to help you make every sale a smart one.

⚖️ Disclaimer

Cindy Coggins Realty Group and its agents are not financial, legal, or tax advisors. The information provided is for general educational purposes only and should not be construed as professional advice. Always consult a qualified tax advisor, CPA, or attorney regarding your specific situation.

 📞 Call or Text: (469) 499-7452
📧 Email: cindycoggins@kw.com

Sources:

• IRS. Publication 523: Selling Your Home. 2023. https://www.irs.gov/pub/irs-pdf/p523.pdf
• IRS. Publication 530: Tax Information for Homeowners. 2023. https://www.irs.gov/pub/irs-pdf/p530.pdf
• IRS. Topic 701: Sale of Your Home. 2023. https://www.irs.gov/taxtopics/tc701
• IRS. Like-Kind Exchanges – Real Estate Tax Tips. 2023. https://www.irs.gov/businesses/small-businesses-self-employed/like-kind-exchanges-real-estate-tax-tips