Legal Question in Real Estate Law in Massachusetts

An individual is exempt from paying capital gains on the first $250,000 on the sale of his primary residence, if it has been his primary residence for at least 2 of the last 5 years. Married couples are exempt on the first $500,000. Anything above those numbers is taxed at long term capital gains tax so long as you have owned the home more than 12 months.

In determing the basis of the home, you include not only the purchase price but any capital improvements such as replacing the roof, replacing a kitchen etc.

Maintenance is not a capital improvement, redecorating like simply painting the walls is not an improvement.

If you are recently married and are selling one home, so the two of you can live together there is a special rule dealing with that situation I believe, but I am not going to deal with that here and now.

Please feel free to contact me if you have more questions.