Selling your home in Kirkland can be one of the most profitable decisions you’ll ever make—but it also comes with tax considerations that every seller should understand. One of the biggest questions is: Will I owe capital gains tax?
This guide breaks down the federal rules, Washington State exemptions, and key takeaways for 2025. And while this information is current at the time of writing, please remember:
Disclaimer: This article is for educational purposes only and does not constitute legal or tax advice. Tax laws can change, and individual circumstances vary. Always consult with a qualified CPA, tax advisor, or attorney to ensure you have the most current and accurate information for your specific situation.
Federal Capital Gains Exclusion Rules
The IRS allows many homeowners to avoid paying capital gains tax when they sell a primary residence, thanks to Section 121 of the Internal Revenue Code.
✔︎ If you’ve owned and lived in your home for at least 2 of the last 5 years, you may exclude:
$250,000 of gain if you file as single
$500,000 if married and filing jointly
(IRS Publication 523 – Selling Your Home)
Example:
You bought your Kirkland home for $600,000 in 2018.
You sell it in 2025 for $1,050,000.
After accounting for improvements and selling costs, your gain is $400,000.
If you’re married filing jointly, the entire gain could be excluded, meaning no federal capital gains tax.
Washington State Capital Gains Tax (2025 Update)
Washington’s long-term capital gains tax now has a tiered structure:
7% on the first $1 million of taxable capital gains
9.9% on any amount over $1 million
(Washington Department of Revenue – New Tiered Rates, June 30, 2025)
However, real estate sales are exempt from this tax, so if you’re selling your home in Kirkland, you are not subject to Washington’s capital gains tax.
(WA DOR – Capital Gains Tax FAQ)
This means if you’re selling your home in Kirkland, state-level capital gains tax does not apply.
Federal vs. Washington State: Quick Comparison
| Jurisdiction | Applies to Home Sale? | Key Details |
|---|---|---|
| Federal (IRS) | Yes, but exclusions apply | Up to $250K (single) or $500K (married) gain can be excluded if you qualify. |
| Washington State | No | Real estate is fully exempt from the state’s capital gains excise tax. |
Why This Matters for Kirkland Sellers
Kirkland homes often appreciate quickly thanks to high demand, proximity to Seattle, and Lake Washington views. That means sellers could see large gains at closing.
Federal exclusions shield many sellers from tax entirely.
State exemptions add another layer of savings.
The result? You keep more of your profit in your pocket when selling your home in Kirkland.
Looking Ahead: Possible Policy Shifts
While Washington’s exemption for real estate remains in place, the broader tax landscape is worth monitoring.
State level: Repeal efforts (like Initiative 2109 in 2024) failed, so the tax is still in effect—but real estate remains exempt (WA Dept. of Revenue).
Federal level: Some experts have discussed reducing or eliminating exclusions for home sales, particularly for retirees in high-value markets. As of 2025, current IRS rules still stand (Kiplinger).
How the Best Realtor in Kirkland Helps You Sell Smart
Even with these advantages, selling a home in Kirkland requires strategy. This is where the Best Realtor in Kirkland, Alina Araujo, makes the difference.
✔︎ 12+ years of real estate expertise in King & Snohomish Counties
✔︎ Master Certified Negotiation Expert (MCNE) – she’ll protect your net proceeds
✔︎ Local market knowledge—pricing your home competitively while maximizing profit
✔︎ Guidance on timing, documentation, and preparing your home for sale
She also offers a free Home Value Estimate and Seller Guide to help you understand exactly what your property is worth before listing.
Conclusion
Selling your home in Kirkland in 2025 comes with strong financial benefits. Federal exclusions can wipe out much or all of your capital gains tax. Washington’s tax does not apply to real estate sales. Working with the Best Realtor in Kirkland, Alina Araujo, ensures you maximize these opportunities while avoiding pitfalls.
Reminder: Always confirm with your CPA or legal advisor before making financial decisions. The rules outlined here are current as of 2025, but your specific situation may vary.
Ready to sell your Kirkland home with confidence? Schedule a call with Alina today and get expert guidance every step of the way.
