Capital Gains Tax When Selling a Home in New Hampshire (2026 Guide)

Quick answer: New Hampshire has no state capital gains tax, so home sellers here only deal with the federal one — and most never owe a dime. If the home was your primary residence for at least two of the last five years, you can exclude up to $250,000 of profit if you file single, or $500,000 if you are married filing jointly. You only pay federal capital gains tax on the gain above that exclusion.

With the New Hampshire single-family median price hitting a record $580,000 in July 2026 — up from $549,700 a year earlier and roughly 36% higher than in 2021 — more long-time owners are finally asking a smart question: if I sell for a big gain, what will I owe? Here is how capital gains tax when selling a home in New Hampshire actually works, who owes it, and how to keep your bill as low as legally possible.

The Phinney Team are licensed REALTORS®, not tax advisors. Use this as a starting point, then confirm the specifics with your CPA before you sell.

Does New Hampshire have a capital gains tax?

No. New Hampshire has no state income tax and no state capital gains tax. The state's old Interest & Dividends Tax — the closest thing it had to an investment tax — was fully repealed effective January 1, 2025. That means when you sell a home in the Granite State, there is no state-level tax on your profit at all. The only capital gains tax you might face is federal, which is exactly why New Hampshire remains one of the most tax-friendly places in the country to own and sell real estate.

How does the federal home sale exclusion work?

The IRS lets most homeowners exclude a large chunk of their profit through the Section 121 primary-residence exclusion. To claim the full amount, you generally need to pass three tests:

• Ownership test: You owned the home for at least two of the five years before the sale.
• Use test: You lived in it as your main home for at least two of those same five years (the two years do not have to be consecutive).
• Timing test: You have not already used the exclusion on another home sale in the past two years.

Pass all three and you can shield up to $250,000 of gain (single) or $500,000 (married filing jointly). Remember, the exclusion applies to your profit, not the sale price — so a couple could sell a home for well over half a million dollars and still owe nothing, as long as the gain stays under $500,000.

When would you actually owe capital gains tax when selling a home in New Hampshire?

Given today's prices, this is the part worth paying attention to. You may owe federal tax if any of these apply:

• Your gain exceeds the exclusion. A single filer who bought a Bedford or Nashua home in the early 2010s and sells today could easily clear $250,000 in profit. The amount above the limit is taxable.
• It is a second home, rental, or investment property. These do not qualify for the primary-residence exclusion at all.
• You owned it less than two years. Short-term gains (under a year) are taxed as ordinary income; even a 1–2 year hold usually misses the exclusion.
• You claimed depreciation on a rental. That depreciation gets "recaptured" and taxed even if the rest of your gain is excluded.

For homes held over a year, federal long-term capital gains rates are 0%, 15%, or 20% depending on your taxable income — and higher earners may also owe the 3.8% Net Investment Income Tax on the excess. After the appreciation we have seen across southern New Hampshire since 2021, we are having this conversation with sellers far more often than we did five years ago, especially retirees downsizing out of homes they have owned for decades.

How is your taxable gain calculated?

Your gain is not simply sale price minus what you paid. The formula is: sale price − selling costs − adjusted cost basis = gain, and then you subtract your exclusion. Your adjusted cost basis is the original purchase price plus the capital improvements you have made over the years — a new roof, an addition, a finished basement, a kitchen remodel, central AC. Selling costs like the real estate commission and legal fees also come off the top.

Example: a married couple bought for $300,000, put $75,000 into improvements (basis now $375,000), and sell for $850,000 with $55,000 in selling costs. Their gain is $850,000 − $55,000 − $375,000 = $420,000 — fully inside the $500,000 exclusion, so they owe nothing. This is why keeping receipts for every improvement matters: it directly shrinks your taxable gain.

How can New Hampshire sellers reduce or avoid capital gains tax?

A few legitimate strategies can lower or eliminate the bill:

• Track every capital improvement. Years of documented upgrades can add tens of thousands to your basis.
• Mind the two-year clock. If you are close to the two-of-five-year threshold, waiting a bit to qualify for the exclusion can save real money.
• Use a partial exclusion. If you sell early because of a job relocation, health issue, or other qualifying life event, the IRS may allow a prorated exclusion.
• Consider a 1031 exchange for investment property. Rental and investment owners can defer the gain by rolling proceeds into another like-kind property.

The right move depends on your numbers, so pair a good CPA with an agent who can pinpoint your home's value and your true selling costs. When you are ready to think about a sale, our home selling resources walk through pricing, net proceeds, and timing, and our buyer resources can help if you are moving up or down at the same time.

Related reading

• Thinking about timing? See the best time to list a home in New Hampshire.
• Budgeting your net proceeds? Read our guide to real estate commission in New Hampshire.
• Worried a sale could fall short of the price you need? Here is how a home appraisal in New Hampshire works.

Frequently asked questions

Do you pay capital gains tax when selling a home in New Hampshire?

Not at the state level — New Hampshire has no capital gains tax. You could owe federal capital gains tax, but only on profit above the $250,000 (single) or $500,000 (married filing jointly) primary-residence exclusion, and only if you meet the ownership and use tests.

How much can I exclude from capital gains when I sell my house?

Up to $250,000 of gain if you file single and $500,000 if you are married filing jointly, provided you owned and lived in the home for at least two of the last five years and have not used the exclusion in the past two years.

Do I owe capital gains tax on a rental or second home in NH?

Usually yes. The primary-residence exclusion does not apply to investment or vacation properties, and any depreciation you claimed on a rental is recaptured and taxed. A 1031 exchange can defer the gain on investment property.

Does the NH real estate transfer tax count as capital gains tax?

No. New Hampshire's real estate transfer tax is a separate charge on the transaction itself, typically split between buyer and seller, and has nothing to do with your profit or federal capital gains tax.

What records should I keep to lower my capital gains?

Keep your closing statement from when you bought, receipts for every capital improvement, and your selling costs. These raise your cost basis and lower your taxable gain, so hold onto them for as long as you own the home.

Have a specific situation in mind? The Phinney Team helps southern New Hampshire homeowners understand their numbers before they list — reach out through teamphinney.com and we will help you map out your net proceeds and connect you with a trusted local CPA.