Money and taxes
Capital Gains When Selling a House Over 55, Colorado
There is no over-55 capital gains rule now.
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The old over-55 home sale break is gone. Today a seller of any age excludes up to $250,000 of gain, or $500,000 married filing jointly, after owning and living in the home 2 of the last 5 years (IRS Publication 523, 2025). Gain above that is taxable income.
Is there still a capital gains break for people over 55?
- No. The one-time over-55 exclusion was replaced by the Section 121 exclusion.
- The current rule has no age test at all.
- Single filers exclude up to $250,000 of gain. Married couples filing jointly exclude up to $500,000 (IRS Publication 523, 2025).
Do I qualify for the full exclusion?
- You owned the home at least 24 months of the last 5 years.
- You lived in it as your main home at least 24 months of the last 5 years.
- You did not use the exclusion on another home in the last 2 years (IRS Publication 523, 2025).
What if my gain is more than $500,000?
- Gain is the sale price, minus selling costs, minus your adjusted basis.
- Adjusted basis is what you paid plus capital improvements: additions, a new roof, a kitchen remodel.
- Commission, title fees and other selling costs reduce the gain.
- Find the receipts for every improvement before you list. Long-held Denver homes carry big gains, and receipts shrink them.
What if my spouse passed away?
- A surviving spouse keeps the $500,000 exclusion if the home sells within 2 years of the death and the survivor has not remarried (IRS Publication 523, 2025).
- After 2 years, the single $250,000 limit applies. Timing the sale matters.
What about a divorce?
- Time your spouse or former spouse owned the home counts as your ownership time.
- If a divorce order lets your former spouse live in the home, that time counts as your use (IRS Publication 523, 2025).
- Sell before or after the decree changes which limit applies. Ask your CPA and attorney before you sign.
What should I do before I list?
- Pull the closing statement from when you bought the home.
- Make a list of improvements with dates and costs.
- Get a Smart Pricing Report from us so your CPA has a real sale price to work with.
- This is not tax advice. Your CPA runs your numbers.
Quick answers
Questions, answered.
Is there a one-time capital gains exemption at 55?
No. That rule was replaced. Any age seller gets up to $250,000 single or $500,000 married filing jointly after 2 of the last 5 years in the home (IRS Publication 523).
Can I use the exclusion on a mountain second home?
No. The exclusion covers your main home. A second home sale is taxed on the full gain unless it becomes your main home and meets the rules. Ask your CPA.
Can I use the home sale exclusion more than once?
Yes, once every 2 years (IRS Publication 523, 2025).
Sources
Where the numbers come from.
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