Georgia Home Sellers: Understand 2026 Capital Gains Tax Rules Right Now
Thinking of selling your property in Georgia? Capital gains tax is top of mind for many homeowners in 2026. The good news: most primary residence sellers can avoid or sharply reduce this tax — if you know the rules and prepare correctly.
- The federal government allows most sellers to exclude up to $250,000 in profit (or $500,000 if married filing jointly) from capital gains tax, provided you pass the ownership and use tests.
- Georgia doesn’t have a separate capital gains tax. Instead, your gain is treated as ordinary income, taxed at the current state rate of 5.09% — with planned reductions ahead.
- Smart preparation — like tracking improvements and selling expenses — can boost your cost basis, reducing taxable gains.
At The Brewer Group, we’ve guided 100+ local sellers through this process. Want to see how much you could keep from your sale? We can help you calculate your potential tax exposure — and show you available active Georgia properties you can move into next.
Primary Residence Exclusion: The Fastest Way to Avoid Capital Gains Tax
If you’ve lived in your Georgia home for at least two of the past five years — and owned it for at least two years — you’re likely eligible for the IRS Section 121 exclusion. Here’s how it works:
- Ownership Test: You must have owned the home for 2 of the past 5 years before the sale.
- Use Test: You must have lived in the home as your primary residence for 2 of those 5 years. The years do not need to be consecutive.
- This can be claimed once every two years.
This exemption can eliminate capital gains tax on the first $250. 000 of profit (or $500 If your gain is below these thresholds and you qualify, your sale may be completely tax-free at the federal level.
If you’re unsure about your eligibility, The Brewer Group can review your ownership history and help you understand your position before you list. It’s a crucial step to maximize your net proceeds.
Increase Your Cost Basis: Document Home Improvements & Selling Expenses
Every dollar you invest in value-adding improvements increases your cost basis — thereby shrinking your taxable gain. It’s not just major renovations; even moderate updates can help.
- Include: Kitchen remodels, bathroom updates, new roofs, additions, and landscaping.
- Don’t forget to count selling expenses: real estate commissions, closing costs, and staging fees.
Here’s an example of how improvements affect your taxable gain:
| Description | Amount |
|---|---|
| Sale Price | $500,000 |
| Original Purchase Price | $300,000 |
| Improvements & Selling Costs | $50,000 |
| Net Gain (for tax purposes) | $150,000 |
In this scenario, all gain would be excluded at the federal level for a single seller (more on that later). The Brewer Group helps clients track eligible expenses throughout the selling process, so nothing gets missed.
Let's be honest:Investment Properties: 1031 Exchange for Tax Deferral
If you’re selling a Georgia property that isn’t your primary residence — like a rental or investment home — you won’t qualify for the primary residence exclusion. But you can still defer capital gains tax with a 1031 exchange.
- To qualify, you must reinvest all proceeds into another "like-kind" investment property.
- You have 45 days after sale to identify replacement properties, and 180 days to complete the purchase.
- This defers the tax — not eliminates it. Taxes are due when you eventually sell the replacement property.
Our team has experience guiding investors through 1031 exchanges, helping you target current investment listings that meet IRS requirements.
Georgia State Taxes: What Sellers Need to Know for 2026
As of 2026, Georgia treats all capital gains as ordinary income. The current tax rate is 5.09%, with plans to decrease to 4.99% by 2028. There’s no separate state capital gains tax — but you may still owe something if your gain exceeds the federal exclusion, or if you’re selling a rental property.
- Keep detailed records for your state return — just as you would for federal taxes.
- Stay updated: Proposed legislation could reduce or eliminate state income taxes by 2032, which may benefit future sellers.
The Brewer Group stays current on all Georgia tax policy changes. We’ll connect you with local tax professionals for the latest guidance, so you don’t miss a potential opportunity to save.
What to Do Next: Find Your Next Home & Get an Expert Tax Strategy
Ready to sell and maximize your profit? Here’s how we can help you succeed in Georgia’s 2026 market:
- We’ll analyze your selling scenario and outline your potential capital gains exposure.
- Our exclusive MLS access means you see properties not found on public sites.
- We guide you through the paperwork, cost tracking, and negotiation — so you sell with confidence.
Browse our live inventory in Peachtree City, Senoia, Brooks, Sharpsburg, Newnan, Fayetteville, and Tyrone — or use the Property Search tool for custom results.
Get Your Free Home Buying/Selling Guide — or directly at . We’re your Keller Williams experts with 10+ years of Georgia market experience. Let’s help you sell smart — and find your next home tax-efficiently.