Do I owe capital gains tax when I sell my Pierce County home?
Most primary-residence sellers in Pierce County owe little to no federal capital gains tax, thanks to an exclusion of up to $250,000 in gain for single filers and $500,000 for married couples filing jointly, provided you’ve owned and lived in the home for at least two of the last five years. Gains above that exclusion — or on non-primary residences — are generally taxable.
How the primary residence exclusion works
The exclusion applies to your gain, not your full sale price — meaning what you sold for, minus what you originally paid, minus qualifying selling costs and capital improvements.
- Ownership and use test: You generally must have owned and lived in the home as your primary residence for at least two of the last five years.
- Exclusion amount: Up to $250,000 in gain for single filers, $500,000 for married couples filing jointly.
- Capital improvements count: Money spent on qualifying improvements — not routine repairs — can increase your cost basis and reduce your taxable gain.
- Washington has no state capital gains tax on real estate sales of this kind, though the state’s separate capital gains tax on certain other investment income has its own rules.
Where sellers get surprised
The most common surprise is for longtime owners with significant appreciation — many Pierce County homeowners who bought a decade or more ago have gains well above the exclusion amount, especially after years of price growth. In that situation, the taxable portion above your exclusion is generally taxed at capital gains rates, not ordinary income rates, but the specifics depend on your full financial picture.
Rental or investment properties, and homes that haven’t been your primary residence for the required period, follow different rules entirely — this article covers primary residences only.
Frequently Asked Questions
What counts as a capital improvement versus a repair?
Improvements that add value or extend the home’s life — a new roof, an addition, major renovations — generally count toward your cost basis. Routine repairs and maintenance typically do not.
Should I talk to a tax professional before selling?
Yes — capital gains rules depend on your full financial situation, and a CPA or tax advisor can confirm your exact exposure before you list, especially if your gain is likely to exceed the exclusion.
This article is general information, not tax advice — every seller’s situation is different, and the only way to know your exact numbers is to run them with a qualified tax professional alongside a clear-eyed valuation of your home. If you’re weighing a move, The Barnard Group’s complimentary Home Selling Strategy Session covers your home’s current value and how it fits into your bigger financial picture. You can book yours at https://www.barnardgroupre.com/sellit.
About Josh Barnard
Josh Barnard is the founder of The Barnard Group and has spent over 20 years helping families navigate some of life’s biggest moments through real estate. Known for his “Work Hard. Be Kind.” approach, Josh combines expert market knowledge, thoughtful marketing, and genuine care to help homeowners make confident decisions about their next chapter.
