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Legal & Tax Guide • Updated January 2026

Legal & Tax Guide for Selling Your House ⚖️💼

Navigate capital gains tax, seller disclosures, contracts, and legal requirements with confidence. Plain English explanations + real examples!

$250K-$500K

Tax Exemption

Disclosure

Requirements

Contracts

Explained

Plain English

No Jargon

IMPORTANT LEGAL DISCLAIMER

WE ARE NOT ATTORNEYS. WE ARE NOT CPAs. WE ARE NOT TAX ADVISORS.

This guide provides general educational information only and is NOT legal advice, tax advice, or professional counsel. Tax laws and legal requirements vary significantly by state, county, and individual situation—and change frequently.

Before making any decisions about selling your property, you MUST consult with:

A licensed real estate attorney in your state
A certified public accountant (CPA) or tax professional
Other qualified professionals as needed for your situation

DO NOT rely solely on this guide for legal or tax decisions. Use this information as a starting point for conversations with qualified professionals only!

What This Guide IS: An educational overview to help you understand common legal and tax topics when selling real estate. A starting point for informed questions to ask your attorney and CPA.

1. Capital Gains Tax (The Big One!)

PRIMARY RESIDENCE EXEMPTION (Most Sellers Pay $0!)

If you lived in the home for 2 of the last 5 years:

Single Filers: First $250,000 profit is TAX FREE! 🎉

Married Filing Jointly: First $500,000 profit is TAX FREE! 🎉

EXAMPLE: Bought for $200K, sold for $420K = $220K profit. You're single. PAY $0 TAX!

What if profit exceeds exemption? Only the amount OVER the exemption is taxed at long-term capital gains rate (0%, 15%, or 20% depending on income).

2. Seller Disclosures (What You MUST Tell Buyers)

Federal & State Requirements:

Lead Paint (Pre-1978 homes): FEDERAL LAW. Must disclose known lead hazards + give buyers 10-day inspection period.

Material Defects: Structural issues, roof leaks, foundation cracks, electrical/plumbing problems.

Water Damage/Flooding: History of leaks, floods, mold.

Deaths on Property: Some states require disclosure of deaths within 1-3 years.

HOA/Liens: Must disclose HOA fees, special assessments, liens.

AS-IS SALES: Even when selling "as-is," you MUST still disclose known defects! "As-is" doesn't mean "hide problems."

3. Sale Contracts Explained

Purchase Agreement

Main contract outlining sale price, timeline, contingencies (inspection, financing, appraisal). Both parties sign = binding agreement!

Contingencies

Conditions that allow buyer to back out: Financing (can't get loan), Inspection (finds major issues), Appraisal (home doesn't appraise). Cash buyers = NO financing/appraisal contingencies!

Earnest Money Deposit

Buyer puts down $500-$5,000 to show they're serious. Held in escrow. If buyer backs out without valid contingency, you keep it!

4. Tax Strategies to Keep MORE Money

Increase Your Basis

Your "basis" = purchase price + improvements. Higher basis = lower profit = less tax! Save receipts for major improvements (new roof, HVAC, etc.).

1031 Exchange (Investment Property)

For rental/investment properties only. Defer ALL capital gains by buying replacement property within 180 days. Complex rules—use qualified intermediary!

Get Cash Offer

Skip the legal complexities. Cash buyers handle disclosures, title work, and contracts professionally!

GET OFFER NOW!

Questions?

Confused about taxes or disclosures? Call us—we'll explain what applies to YOUR situation!

CALL (800) 555-0100

Key Takeaways

$250K-$500K tax exemption

Must disclose known defects

Save improvement receipts

Consult CPA + attorney

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