We have $600,000 in equity — will we owe capital gains tax when we sell?

Not necessarily. Taxes are based on gain, not equity. Gain is generally the sale price minus your adjusted cost basis, including purchase price, qualifying improvements, and selling costs.

What’s the difference between equity and gain?

Equity is what you would net after paying off your mortgage. Gain is the taxable profit calculated after subtracting your adjusted basis and selling costs from the sale price.

If a married couple has a $600,000 gain, how much could be taxable under current law?

Under current law, a married couple can exclude up to $500,000. If their gain is $600,000, up to $100,000 could be taxable depending on their overall tax situation.

Should Massachusetts homeowners wait to sell in case the exclusion increases?

There is no guaranteed timeline for a law change. Many sellers are better served by estimating their actual gain and weighing today’s market conditions against their personal plans.

Will the Capital Gains Exclusion Increase in 2026 for Massachusetts Home Sellers?

Q: Has the capital gains exclusion increased in 2026?

No. As of March 2, 2026, the federal primary residence exclusion remains $250,000 for single filers and $500,000 for married couples filing jointly.

by Jim Armstrong

Quick answer:

As of March 2, 2026, the primary residence capital gains exclusion has not been increased. The limits remain $250,000 (single) and $500,000 (married filing jointly) under federal law. Proposals supported by groups like NAR have been discussed, but no bill has become law yet, so there is no official effective date for an increase.

Current Capital Gains Exclusion on a Primary Residence

Federal exclusion (Section 121):

$250,000 max exclusion for single filers
$500,000 max exclusion for married filing jointly

Basic eligibility test (snippet-ready):
You typically qualify if you owned and lived in the home for at least 2 of the last 5 years before selling.

Why This Matters in Massachusetts

In many Massachusetts communities—especially Greater Boston, the North Shore (Salem, Beverly, Marblehead, Gloucester, Ipswich) and high-demand suburbs—home values have grown enough that long-time owners can bump into the $500,000 married cap more often than people expect.

This can influence:

Downsizing decisions
Moving closer to family
Timing a sale vs. renovating
Whether to rent for a year before buying again

Example: Married Couple With $600,000 Equity (How Tax Exposure Works)

The key point:

Equity ≠ taxable gain.
Taxes are based on gain, not equity.

Taxable gain formula (snippet-ready):
Gain = Sale price − (Purchase price + capital improvements + selling costs)

If their gain is $600,000 (for example):

Under current law (2026):

Exclusion (married): $500,000
Potential taxable gain: $600,000 − $500,000 = $100,000

Simple federal estimate:
If that $100,000 is taxed at 15% long-term capital gains, that’s about $15,000 federal (not counting other potential taxes).

If the exclusion were raised (commonly proposed idea: up to $1M for married):

Excluded: $600,000
Taxable gain: $0
Potential federal tax: $0

Takeaway: If your gain is near/over $500K, an increased exclusion could save you five figures—but it’s not law yet.

Before assuming you’ll exceed the $500K cap, start with a current value estimate and review how improvements affect your basis:
👉 https://armstrongfield.com/evaluation

Should Massachusetts Homeowners Wait to Sell?

Featured snippet-style answer:
Most homeowners shouldn’t delay a sale solely hoping for a tax-law change, because there’s no guaranteed timeline. If you’re close to the threshold, it’s smarter to (1) estimate your gain accurately and (2) weigh today’s market conditions, mortgage rates, and your lifestyle plans.

If you're thinking about selling on the North Shore or anywhere in Massachusetts, here’s a step-by-step guide to your next move:
👉 https://armstrongfield.com/sell-my-massachusetts-home

Local Massachusetts Notes Sellers Often Miss

1) Your “gain” may be lower than you think

Many Massachusetts owners have meaningful capital improvements (roof, siding, kitchens, additions). Those improvements can increase your basis and reduce taxable gain.

2) Selling costs matter

Agent commissions, staging, and other transaction costs may reduce gain.

3) Timing can matter in MA

In places like Salem, Beverly, Newburyport and the entire North Shore, seasonality is real—spring demand often boosts competition, but inventory and pricing strategy vary by town, neighborhood, and price bracket.

FAQ

Has the capital gains exclusion increased in 2026?

No. As of March 2, 2026, the exclusion remains $250,000 single / $500,000 married.

Is Massachusetts changing this rule?

The exclusion is federal. Massachusetts may still tax gains depending on your situation, but the $250K/$500K exclusion is federal law.

We have $600K equity—will we owe capital gains tax?

Not necessarily. Taxes are based on gain, not equity. Your gain depends on purchase price, improvements, and selling costs.

What would an increased exclusion do for a couple with a $600K gain?

Under the current $500K cap, a $600K gain could leave $100K taxable. If the cap increased to $1M, that same $600K gain could potentially be fully excluded.

Should we sell now or wait?

If you’re unsure, calculate a realistic gain estimate first. Then compare that to market conditions and your goals. Waiting for a law change is a gamble.

More seller-focused market insights and tax planning considerations:
👉 https://armstrongfield.com/blog?categoryId=26599

Browse what’s currently on the market in Massachusetts:
👉 https://armstrongfield.com/listing