Do You Pay Capital Gains Tax When Selling a Home in Lafayette? [Consult with a Pro First]

Do you have to pay capital gains tax when selling a home in Lafayette, Colorado?

You may need to pay capital gains tax when selling a home in Lafayette, CO, but many homeowners qualify for an exemption. If the home was your primary residence for at least two of the last five years, you may exclude up to $250,000 in profit (or $500,000 for married couples). However, tax situations vary, so it's best to consult a financial advisor or CPA. Kirsten Johansson of The Levi Group Brokered by Real can connect you with trusted professionals and guide you through the sale.

What Is Capital Gains Tax?

Capital gains tax is a federal tax on the profit made from selling certain assets, including real estate. When you sell a home for more than what you originally paid (plus improvements), the profit may be taxable as a capital gain.

There are two types:

• Short-Term Capital Gains: Applied to properties held for less than a year; taxed at your regular income rate.

• Long-Term Capital Gains: Applied to properties held longer than a year; taxed at a lower rate (0%, 15%, or 20%, depending on income).

Primary Residence Exclusion for Lafayette Sellers

Many Lafayette homeowners qualify for the IRS's Section 121 exclusion, which allows you to exclude capital gains on the sale of a primary residence:

• Up to $250,000 for single filers

• Up to $500,000 for married couples filing jointly

To Qualify, You Must:

• Have owned the home for at least 2 of the past 5 years

• Have lived in the home as your primary residence for at least 2 of the past 5 years

• Not have claimed the same exclusion on another home sale within the last 2 years

If you meet these criteria, your home sale profits are tax-free up to the limit.

What If You Don’t Qualify?

If the home was a rental, vacation property, or held for investment, you may owe capital gains tax. However, you may be eligible for other strategies, such as:

• 1031 Exchange (for investment properties): Defer taxes by reinvesting proceeds into another qualifying property.

• Adjusted Basis Calculations: Include improvements and selling costs in your cost basis to reduce taxable gain.

Lafayette Home Improvements That May Affect Taxes

Home improvements that increase your home's value can reduce your taxable gain when included in your cost basis. Save receipts for:

• Kitchen or bathroom remodels

• Room additions or basement finishing

• New roofs, HVAC systems, or windows

• Landscaping and fencing

These expenses increase your adjusted cost basis and reduce your capital gain.

Example Scenario

Let’s say you bought your Lafayette home for $400,000 and sold it for $700,000:

• Gain: $300,000

• If single: You’d owe tax on $50,000 ($300K gain - $250K exclusion)

• If married: No tax due ($300K gain under $500K exclusion)

Always confirm calculations with a qualified tax professional.

Why Work With The Levi Group?

Selling a home isn’t just a financial decision—it’s a tax event. That’s why Kirsten Johansson of The Levi Group collaborates with local CPAs, attorneys, and financial planners to support every step of your sale. We help you:

• Determine if you qualify for capital gains tax exemptions

• Estimate your net proceeds after taxes

• Sell your home for top dollar with minimal surprises

Final Thoughts: Be Smart About Taxes When Selling in Lafayette

If you're selling a home in Lafayette and concerned about capital gains tax, don’t guess—get expert advice. With the right team and a solid understanding of the rules, you can keep more of your profit and move forward with confidence.

Contact Kirsten Johansson of The Levi Group Brokered by Real
📧 kirsten@thelevigroup.net
📞 (603) 583-0151
🌐 www.thelevigroup.net

Your Lafayette Home Selling Experts

Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or tax advice. Please consult with licensed professionals regarding your specific situation.