Can San Diego Seniors Avoid Capital Gains When Selling Their Home?
Can you escape capital gains? In some cases, yes. Many San Diego homeowners over the age of 55 qualify for exclusions or strategies that reduce or eliminate capital gains tax when selling a longtime residence. Understanding these options can protect your equity and help you keep more of your proceeds for retirement or future housing plans.
As a Certified Senior Advisor and Senior Real Estate Specialist in San Diego, Melina Rissone guides retirees through this important stage. She works closely with financial and tax professionals to help clients make informed decisions before listing their homes.
What Are Capital Gains and Why They Matter for Seniors
Capital gains are the profit made from selling an asset for more than you paid for it. In real estate, that means the difference between your purchase price and the amount you sell your home for, after accounting for improvements and selling costs.
For many seniors who have owned their homes for decades, the property value has increased significantly. That appreciation can create a large taxable gain unless certain exemptions apply. Melina helps clients review their ownership history and filing status before listing so that the timing and preparation align with available tax benefits.
Avoiding Capital Gains Tax When Selling Your Home
One of the most helpful tools for San Diego seniors is the IRS primary residence exclusion. If you have lived in your home for at least two of the last five years, you can exclude up to $250,000 of profit from taxes if filing as a single person, or $500,000 if married and filing jointly.
This exclusion often covers a large portion of the gain for many longtime homeowners. The key is to sell while the property still qualifies as your primary residence, not after it becomes a rental or investment home. Seniors who plan to downsize or move to assisted living should consider timing their sale carefully to maintain this benefit.
When Seniors Might Owe Capital Gains
Even with the exclusion, some seniors in high-value San Diego neighborhoods such as La Jolla, Point Loma, or Mission Hills may still face taxable gains because of long-term appreciation. In those cases, the total profit exceeds the exclusion limit.
Common triggers for taxable gains include:
Owning multiple properties and selling a secondary home
Selling after converting a primary home into a rental
Missing the two-year occupancy requirement
When these situations arise, Melina Rissone recommends speaking with a qualified tax advisor. While she provides real estate expertise, tax planning decisions should always come from a licensed professional.
Options to Reduce or Defer Capital Gains
For seniors who exceed the exclusion, several strategies can help reduce or delay taxes:
Document Improvements: Keeping records of upgrades and remodels can increase your home’s cost basis, lowering your taxable gain.
1031 Exchange: If selling an investment property, reinvesting in another property of equal or greater value may defer taxes.
Installment Sale: Spreading payments over several years can reduce the annual taxable amount.
Charitable or Family Transfers: In specific cases, gifting or charitable trusts can offset gains.
As a senior real estate specialist, Melina works with clients and their advisors to structure sales in ways that best fit their long-term plans.
Downsizing or Relocating Without Unexpected Taxes
Many seniors who sell their home in San Diego are preparing to downsize, move closer to family, or transition into senior-friendly housing. Melina Rissone helps clients evaluate when to sell, how to qualify for capital gains exclusions, and how to make the move as seamless as possible.
She often works with homeowners in Bankers Hill, Clairemont, and other neighborhoods where longtime residents have built significant equity. By reviewing timing, property condition, and local demand, she helps seniors sell for maximum value while staying aware of potential tax implications.
Special Rules for Widowed Homeowners
For seniors who have lost a spouse, the IRS provides important protections that can reduce capital gains. A stepped-up cost basis resets the home’s value to its market value at the time of the spouse’s passing, often lowering taxable profit.
Widowed homeowners may also use the full $500,000 exclusion if the home is sold within two years of the spouse’s death and other requirements are met. Waiting longer may reduce this benefit.
Because timing is crucial, Melina encourages widowed clients to consult a tax professional before listing to ensure they receive all available advantages.
How Proposition 19 Affects Seniors Selling and Moving
California’s Prop 19 offers major benefits for homeowners over 55 who want to move without increasing their property tax bill. Under Prop 19, eligible seniors can transfer their existing property tax base to a new primary residence anywhere in the state, even if the new home is more expensive.
This can make downsizing or relocating far more affordable. Many retirees use this option to move closer to family, reduce maintenance costs, or transition into senior-friendly housing while keeping their tax burden low.
Melina Rissone helps clients understand how Prop 19 works, what documents are needed, and when to file the transfer application so the move is smooth and financially efficient.
Why Having a Certified Senior Advisor Matters
Real estate transactions later in life often involve emotional and financial complexity. A certified senior advisor is trained to understand these challenges and helps clients make informed, practical choices. Melina’s experience allows her to coordinate with accountants, attorneys, and family members so each sale is both fair and financially sound.
She reminds clients that preparation and professional advice are the best ways to protect hard-earned equity. Knowing the rules before you sell can prevent costly surprises after closing.
The Bottom Line
So, can San Diego seniors avoid capital gains when selling their home? In many cases, yes. The home sale exclusion, smart record keeping, and proper timing can make a major difference. Each homeowner’s situation is unique, so it’s essential to plan ahead.
If you’re thinking about selling your longtime home or downsizing, reach out to Melina Rissone today to discuss your goals and receive a personalized consultation. She’ll help you review your options, connect you with trusted professionals, and guide you toward a confident sale that protects your financial future. Call or text 619-678-1350 to get started.
Melina Rissone, Associated Real Estate Broker Coldwell Banker Global Luxury, Certified Senior Advisor (CSA) and Real Estate Collaboration Specialist – Divorce (RCS-D) in San Diego. I help people going through divorce in San Diego figure out what to do with the house—whether you're ready to sell now or just need a neutral opinion. I help seniors looking to retire in San Diego figure out what to do with the house—whether you're ready to sell now or just need a neutral opinion.
Melina Rissone
Having sold properties for more than 20 years and earning various prestigious awards throughout the course of her career, Melina Rissone has more than earned her reputation as one of San Diego's most skilled and trustworthy real estate brokers selling homes and luxury condominiums. Her loyal clientele would share that Melina brings structure and planning to chaos. She specializes in supporting her clients and their referrals; families and individuals going through divorce and seniors and active adults planning their moves and financial decisions during their retirement years.
Coldwell Banker Global Luxury and Institute of Luxury Home Marketing certified.
Certified Senior Advisor by the Society of Certified Senior Advisors
Cartus Network Inventory Specialist and Cartus Network Marketing Specialist since 2015.
RCS-D Designation, a Real Estate Collaboration Specialist for Divorce.
SRES Certification through NAR is a Seniors Real Estate Specialist certification.
Melina is bilingual in English and German.
Recognized as the Top 4% of all real estate brokers in San Diego County in 2021 and the Top 3% of Coldwell Banker International.
Coldwell Banker Presidents Elite Award.
Recognize as the Top 2% of Coldwell Banker West in 2024.
Coldwell Banker Global Luxury and Institute of Luxury Home Marketing Certified.
We were looking to buy a place in SD Northpark and luckily we met up with Melina to show us multiple condo. She is very friendly, personable and very professional agent. We would not hesitate to work with her again.
-Chau N.
