Do you owe capital gains tax when selling a Grand Rapids home?

Most Grand Rapids primary-residence sellers owe no federal capital gains tax because the IRC Section 121 exclusion shields up to $250,000 of gain for single filers and $500,000 for married filing jointly, provided you owned and used the home as your principal residence for at least two of the last five years. On the $429,000 average sale price across Holden Richardson's 150 closings, the typical Grand Rapids seller is well under the exclusion threshold even after a decade of appreciation. Sellers above the cap, investment-property sellers, and sellers who fail the use test owe federal long-term capital gains at 0%, 15%, or 20% plus Michigan state income tax at 4.25% (as of 2026 — verify current rate). Cost basis is the math that decides whether you owe anything. Basis equals what you paid for the home plus capital improvements (new roof, kitchen remodel, addition), minus any depreciation taken if the property was ever rented. Holden Richardson, Realtor®, 616 Realty LLC, MI License #6501392389, runs a basis-and-exclusion check at the listing appointment and refers sellers to a CPA for fact-specific tax planning before closing.