Nevada capital gains tax when you sell a home

Does Nevada tax capital gains on a home sale?

No. Nevada's constitution bars an income tax on the wages or personal income of natural persons, so the state takes nothing from your gain. But at ZIP 89511 price levels, the federal exclusion of $250,000 or $500,000 can be smaller than the gain on a home you've owned for a decade, and the federal bill on the rest is decided by your records and your filing status. Living in a no-income-tax state doesn't change that federal bill.

Zillow's typical home value for ZIP 89511, the ZIP that contains ArrowCreek, rose 102.5% in the ten years to September 2026, from $553,227 to $1,120,342. A home that tracked that index roughly doubled. On a seven-figure purchase, doubling produces a gain well past either exclusion.

What the Nevada constitution says

Article 10 says no income tax shall be levied on the wages or personal income of natural persons. It allows taxes on business income, and a separate clause bars any inheritance tax. For an individual selling a home, there is no Nevada return to file on the gain and no state rate to add to the federal one.

What still applies

Federal law applies in full: the home-sale exclusion under Section 121, the long-term capital gains rates, the 3.8% net investment income tax, the 1031 rules for investment property and FIRPTA withholding for foreign sellers. Each has its own section below.

How the $250,000 and $500,000 home-sale exclusion works

Section 121 lets you leave up to $250,000 of gain off your income, or $500,000 if you file jointly with your spouse. For a seller with a large gain it's the first thing to check, and it has three conditions.

The two-out-of-five-year test

You must have owned the home for at least 24 months of the five years before the sale, and used it as your residence for at least 24 months of those five years. You also can't have used the exclusion on another home in the two years before this sale.

When you qualify for only part of it

If you fall short of two years, IRS Publication 523 allows a partial exclusion when the main reason for the sale was a change in workplace location, a health issue or an unforeseeable event. Bring the dates and the reason for the sale to your tax preparer.

You may still have to report the sale

If you receive a Form 1099-S from the closing, you must report the sale on your return even if the whole gain is excluded. Keep the closing statement with your tax papers for that reason.

How do you work out the gain on your home?

The IRS formula has two halves: what you got, and what you put in. The gain is the difference.

Amount realized: the price less selling expenses

Start with the sale price and subtract the costs directly tied to selling, such as sales commissions, advertising and legal fees. Whether the Washoe transfer tax you pay counts as a selling expense is a question to put to a CPA: Publication 523 names transfer taxes among a buyer's settlement costs, and its seller list doesn't name them. The Nevada seller closing costs breakdown lists every line you might pay.

Adjusted basis: what you paid plus improvements

Basis begins with what you paid for the home and grows with improvements, meaning work that adds value, prolongs its life or adapts it to new uses. Routine repairs don't count. A remodel or an addition can raise your basis substantially, and once your gain is above the exclusion, every dollar of it comes straight off the taxable gain, so this is the part of the calculation where records pay.

What are the long-term capital gains rates for 2026?

A gain on a home you've held more than a year is taxed at 0%, 15% or 20%, depending on your total taxable income with the gain included. The IRS published the 2026 thresholds in Revenue Procedure 2025-32.

How the brackets stack on your other income

Your ordinary income fills the brackets first, and the gain sits on top of it. So a couple with $150,000 of other taxable income has already used the 0% band, and the gain starts in the 15% band. A large taxable gain often runs from 15% into 20% within the same sale.

Gain from depreciation you claimed

If you ever claimed depreciation on the home, for example while renting it out, the IRS taxes that part of the gain, called unrecaptured section 1250 gain, at a maximum rate of 25%. Tell your preparer about any rental or home-office years.

Does the 3.8% net investment income tax apply to a home sale?

It can. The tax is 3.8% of the lesser of your net investment income or the amount by which your modified adjusted gross income exceeds $250,000 (married filing jointly), $200,000 (single or head of household) or $125,000 (married filing separately). These thresholds are not indexed for inflation, so they don't rise with prices or incomes.

What part of the gain it reaches

The part of your home-sale gain covered by the Section 121 exclusion is never subject to it. Only the gain above the exclusion counts as investment income. The IRS gives its own example: a couple sells for $1.3 million with a $600,000 gain, excludes $500,000, and with $125,000 of other investment income and $300,000 of modified AGI owes $1,900 in NIIT.

The top federal rate on a home-sale gain

Put the 20% bracket and the 3.8% tax together and the top federal rate on a long-term gain is 23.8%, before any 25% depreciation portion. In Nevada nothing is added to that.

Worked example: capital gains tax on a $2.65 million sale

Here is the arithmetic on one home, so you can redo it with your own numbers. Suppose you bought for $1.3 million in 2016 and sell for $2.65 million in 2026, close to the path the ZIP 89511 index took. You've spent $200,000 on improvements, selling expenses come to a hypothetical $100,000 (enter your own), and you have $150,000 of other taxable income. For simplicity, assume modified AGI equals other income plus the taxable gain, and no other investment income.

What the example shows

Filing status alone moves the bill by $64,810, because a single seller gets half the exclusion and reaches the 20% band sooner. The $200,000 of improvements saves $47,600 in both columns (20% plus 3.8% on $200,000). Without them the gain would be $200,000 larger, and that extra slice would sit on top of everything else: above the 20% threshold for the couple as well as the single seller, since the couple's gain already reaches the 20% band, and fully inside the NIIT for both. A seller whose gain stays below the 20% threshold would save at 15% instead, so the same receipts are worth less, but they're worth keeping either way. For the couple, the NIIT applies to $450,000, the amount their modified AGI of $700,000 exceeds $250,000, since that is less than the $550,000 gain.

Run it with your own figures

Start with a price. The home value estimator for ArrowCreek moves what you paid by the ZIP 89511 index, which is a rough first figure. Then put that price into the seller net sheet to see your selling costs, and use the table above with your basis, your exclusion and your income.

Can a 1031 exchange defer tax on a Nevada property?

Only if the property was held for business or investment. A Section 1031 exchange defers, but doesn't erase, the tax on gain when you trade one investment property for another. Your main home and a second or vacation home used mainly for personal purposes don't qualify, and since 2018 only real property can be exchanged.

The 45-day and 180-day deadlines

You have 45 days from the sale to identify replacement properties in writing, and the exchange must be completed within 180 days or by your tax return's due date with extensions, whichever comes first. Notice given only to your own attorney, real estate agent or accountant doesn't count. The exchange is reported on Form 8824.

If you're selling a Reno rental, remember that Nevada has no income tax, so the deferral is purely federal. Plan it with a CPA before the sale closes, because the 45-day clock starts at the sale.

What happens if the seller is not a US person?

If the seller is a foreign person under FIRPTA, the buyer generally must withhold 15% of the amount realized at closing. There is no withholding when an individual buyer will use the home as a residence and the price is $300,000 or less, and the rate falls to 10% for a residence priced above $300,000 up to $1,000,000.

Above $1 million the full 15% applies, which on a $2.65 million sale is $397,500 held back from your proceeds. If that's your situation, a CPA who handles FIRPTA can tell you how the withholding is reconciled with the tax you owe, and you'll want that answer before you list.

How can you reduce capital gains tax on a home sale?

Most of the levers are records and timing. The rates are the rates; what you control is the size of the gain they apply to.

Raise your basis with records

Collect invoices, permits and contracts for every improvement since you bought. Work you can't document is hard to claim.

Count every selling expense

Commissions, advertising and legal fees reduce the amount realized. Keep the final closing statement, and ask your CPA which other closing lines qualify.

Mind the 24 months

If you're a few months short of two years of ownership or use, waiting can turn a fully taxable gain into an excluded one. If you've moved out, check when the five-year look-back would start to exclude your years of living there.

Spread other income

Because the gain stacks on your other income, a year with lower wages or fewer other gains can keep more of it in the 15% band and under the NIIT thresholds. That's a planning question to raise in the year before the sale.

Taxes are one part of what a sale leaves you. The plan for selling an ArrowCreek home covers pricing, timing and the steps to closing. If it helps, I can send you the recent ArrowCreek sales you'd need to set a realistic price before you meet your CPA.

Confirm these with a Nevada CPA before you sell

This page describes how the rules work. It isn't tax advice, and your return depends on facts only you and a preparer can check. Take these questions to a CPA or tax attorney:

1. Do I meet the ownership and use tests on the closing date I'm planning, and does anything reduce my exclusion?
2. Which of my past projects count as improvements, and what is my adjusted basis?
3. Which closing costs, including the Washoe transfer tax, reduce my amount realized?
4. Did I ever claim depreciation on the home, and how much gain is taxed at up to 25%?
5. Where will the gain land in the 2026 brackets, and how much net investment income tax applies?
6. If this is investment property, should I set up a 1031 exchange before closing?

Common questions

Sources

• Nevada Legislature: Constitution of the State of Nevada, Article 10
• IRS: Topic no. 701, Sale of your home
• IRS: Publication 523, Selling Your Home (2025)
• IRS: Rev. Proc. 2025-32 (2026 inflation adjustments)
• IRS: Topic no. 409, Capital gains and losses
• IRS: Questions and Answers on the Net Investment Income Tax
• IRS: Topic no. 559, Net investment income tax
• IRS: Like-Kind Exchanges - Real Estate Tax Tips
• IRS: FIRPTA Withholding
• Cornell LII: 26 U.S.C. 1445
• Zillow Research: Home Value Index (ZHVI), ZIP 89511, September 2026