Do I Pay Capital Gains Tax When I Sell My Home on Staten Island or in Brooklyn in 2026?

Most homeowners who sell a primary residence on Staten Island or in Brooklyn in 2026 pay no federal capital gains tax, because the Section 121 exclusion shelters up to $250,000 of gain for a single filer and up to $500,000 for a married couple filing jointly. Whether you owe anything depends on your gain, how long you lived there, and whether part of the home was a rental. Joseph Ranola helps Staten Island and Brooklyn sellers understand the numbers before they list – though for filing decisions you should always confirm with a CPA.

How does the capital gains home-sale exclusion work in 2026?

Here is the core rule. The IRS Section 121 exclusion lets you exclude up to $250,000 of gain on the sale of your primary residence if you file single, and up to $500,000 if you are married filing jointly. To qualify, you must pass two tests: you must have owned the home for at least two of the five years before the sale (the ownership test), and you must have lived in it as your primary residence for at least two of those five years (the use test). You can only use the exclusion once every two years.

One detail trips up a lot of sellers: these limits have not been adjusted for inflation since 1997. A Staten Island or Brooklyn family that bought a home 25 or 30 years ago and watched it appreciate can blow past the $500,000 married exclusion on a single sale – and the portion above the limit is taxable.

What is “gain” – and why is it not the same as your sale price?

Your taxable gain is not your sale price. It is your sale price minus your cost basis, and minus selling costs. Cost basis starts with what you paid for the home, then adds the cost of capital improvements over the years – a new roof, a finished basement, an addition, a renovated kitchen. Keep those receipts. On a long-held Staten Island or Brooklyn home, documented improvements can add tens of thousands of dollars to your basis and shrink the taxable gain. Selling costs like the real estate commission and attorney fees also reduce the gain.

If you’re selling on Staten Island, here’s what’s different

Staten Island’s most common product is the detached or semi-attached single-family home and the legal two-family. For a straight single-family primary residence, most sellers stay comfortably under the exclusion – the median Staten Island home gain rarely exceeds $500,000 for a married couple. The exception is the legal two-family: if you rented out one unit, the rental portion does not get the full exclusion and may be subject to depreciation recapture, taxed at a federal rate up to 25% on the depreciation you claimed. If you owned a Sunnyside or Eltingville two-family and rented the second unit for years, that part of the sale is treated differently from your owner-occupied unit.

If you’re selling in Brooklyn, here’s what’s different

Brooklyn sellers are far more likely to exceed the exclusion. A brownstone in Park Slope or a townhouse bought decades ago in Bedford-Stuyvesant can carry a gain well above $500,000, which means a real federal capital gains bill on the excess. Brooklyn also has more mixed-use and multi-family buildings where part of the property was income-producing, triggering the same rental-portion and depreciation-recapture rules. The higher the Brooklyn gain, the more it matters to document every capital improvement and to plan the sale year with a CPA.

What about New York State and NYC taxes when I sell?

Two things to separate here. First, taxable capital gain above the federal exclusion is taxed federally – generally 0%, 15%, or 20% depending on income – and New York State taxes that same gain as ordinary income, with a top state rate near 10.9%. That state layer is the real New York City delta: a taxable home-sale gain costs a NYC-area seller more than the same gain would in a no-income-tax state. Second, separate from capital gains, New York sellers pay transfer taxes at closing: the New York State transfer tax of 0.4% of the sale price, plus the NYC Real Property Transfer Tax of 1% on residential sales up to $500,000 and 1.425% above $500,000. Those transfer taxes apply whether or not you owe any capital gains.

How much money will I actually walk away with?

Your net is your sale price, minus the mortgage payoff, minus selling costs (commission, attorney, NYC and NYS transfer taxes), minus any capital gains tax on gain above the exclusion. With 30-year mortgage rates near 6.42% as of late June 2026, buyer demand is steady but price-sensitive, so pricing your Staten Island or Brooklyn home correctly from day one protects your net more than any tax maneuver. Joseph Ranola builds a net-proceeds estimate for every seller before listing, so there are no surprises at the closing table.

This article is general information, not tax or legal advice. Joseph Ranola is a licensed real estate agent, not a CPA or attorney – always confirm your specific capital gains situation with a tax professional.

How do I get a net-proceeds estimate for my home?

Call or text Joseph Ranola at (917) 905-2541, email [email protected], or visit ranolarealestate.com. Find out what your Staten Island home is worth or what your Brooklyn home is worth. Related guides: veterans and VA buyers in Clifton and selling an inherited home in Sunnyside.