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Are Home Seller Expenses Tax Deductible?

What Homeowners Need to Know Before Selling

Presented by The Nestwell Group

Selling a home often comes with significant expenses, and many homeowners wonder whether those costs are tax deductible. While seller expenses are not deducted in the traditional sense, they can still provide meaningful tax savings by reducing your taxable capital gain.

This page explains how seller expenses are treated for federal tax purposes and what homeowners should know when preparing to sell.

The Short Answer

Home seller expenses are not itemized tax deductions.

However, most seller expenses reduce your taxable capital gain, which can lower — or even eliminate — capital gains tax when you sell your home.

How Capital Gains Are Calculated

When you sell your home, the IRS calculates your capital gain using this formula:
Capital Gain = Sale Price – Adjusted Cost Basis
Seller expenses are typically subtracted from the sale price, reducing the gain that may be subject to tax.

Common Home Seller Expenses That Reduce Capital Gains

The following seller-paid expenses generally count toward reducing your taxable gain:

Real estate agent commissions
Title and escrow fees
Attorney fees related to the sale
Transfer taxes and recording fees
Seller-paid closing costs
Marketing and advertising expenses
Seller-paid home inspection or appraisal fees
These costs are usually documented on your closing statement, which should be kept for your records.

Example: How Seller Expenses Lower Taxes

Sale price: $600,000
Seller expenses: $45,000
Net sale price: $555,000

If your original purchase price plus qualifying improvements was $350,000:

Capital gain = $555,000 – $350,000 = $205,000

Without accounting for seller expenses, your taxable gain would have been significantly higher.

Expenses That Do Not Reduce Capital Gains

The following items generally do not reduce your taxable capital gain:

Mortgage payoff
Property taxes already deducted in prior years
Utility bills
Homeowner association dues
Routine repairs or maintenance
Insurance premiums
Only selling-related costs and qualifying improvements affect capital gains calculations.

What This Means for Primary Residence Sellers

Many homeowners qualify for the primary residence capital gains exclusion:

✅ Up to $250,000 of profit for single homeowners

✅ Up to $500,000 of profit for married couples filing jointly

If your total gain is already below these limits, seller expenses may not change your tax outcome — but keeping accurate records is still important.

Why Documentation Matters

To properly account for seller expenses:

✅ Keep your final settlement statement

✅ Save invoices and receipts

✅ Retain records for several years after the sale

Good documentation can protect you in the event of an IRS question and ensure your gain is calculated correctly.

Final Thoughts from The Nestwell Group

While home seller expenses are not directly deductible, they play an important role in reducing taxable capital gains. Understanding this distinction helps homeowners plan more effectively and avoid unnecessary tax surprises.

This information is provided for general educational purposes only and is not tax advice. Always consult a qualified tax professional or CPA regarding your specific situation.

The Nestwell Group

The Nestwell Group helps homeowners navigate the selling process with clarity, strategy, and confidence — from pricing and preparation to understanding how tax considerations may affect your net proceeds.

Every homeowner’s situation is different, and having the right guidance can make all the difference.

If you’re considering selling or downsizing and want guidance you can trust, The Nestwell Group is here to help. We’ll take the time to answer your questions, explain your options, and help you move forward with confidence — at your pace.

The data relating to real estate for sale on this web site comes in part from the Broker Reciprocity Program of GAMLS. All real estate listings are marked with the GAMLS Broker Reciprocity thumbnail logo and detailed information about them includes the name of the listing brokers. The broker providing these data believes them to be correct, but advises interested parties to confirm them before relying on them in a purchase decision. Copyright 2023 GAMLS. All rights reserved.

Are Home Seller Expenses Tax Deductible?

What Homeowners Need to Know Before Selling

Presented by The Nestwell Group

The Short Answer

How Capital Gains Are Calculated

Common Home Seller Expenses That Reduce Capital Gains

Example: How Seller Expenses Lower Taxes

Expenses That Do Not Reduce Capital Gains

What This Means for Primary Residence Sellers

Why Documentation Matters

Final Thoughts from The Nestwell Group

​The Nestwell Group

Home

Are Home Seller Expenses Tax Deductible?

What Homeowners Need to Know Before Selling

Presented by The Nestwell Group

The Short Answer

How Capital Gains Are Calculated

Common Home Seller Expenses That Reduce Capital Gains

Example: How Seller Expenses Lower Taxes

Expenses That Do Not Reduce Capital Gains

What This Means for Primary Residence Sellers

Why Documentation Matters

Final Thoughts from The Nestwell Group

​The Nestwell Group

The Nestwell Group

The Nestwell Group