Residential Capital Gains Tax in Georgia

See below for a basic understanding on Georgia law. Recommend you speak with a tax expert for specifics so you can have correct and complete information to make a decision.

1. Federal Capital Gains Tax
Primary Residence Exclusion

At the federal level, homeowners selling their primary residence may exclude up to $250,000 in gains if single, and up to $500,000 if married filing jointly, provided they have owned and lived in the home for at least 2 of the last 5 years

Example: If a married couple sells their home and realizes a $450,000 gain, they can exclude the full amount and owe no federal capital gains tax

2. Federal Capital Gains Tax
When the Exclusion Doesn’t Apply

  • If you don’t meet the "2‑out‑of‑5 years" requirement, or your gain exceeds the exclusion limit, the excess gain is taxed at long-term capital gains rates. These range from 0%, 15%, to 20%, depending on your taxable income

  • High earners may also owe an additional 3.8% Net Investment Income Tax (NIIT) on investment income, including capital gains

3. GEORGIA Tax on Capital Gains

Georgia does not offer a state-level capital gains exemption similar to the federal rules. Instead, gains are taxed as ordinary income under Georgia’s income tax structure

  • As of 2025, Georgia applies a flat state income tax rate of 5.49%, scheduled to gradually decline to 4.99% by 2029, pending certain economic targets

  • Georgia does not differentiate between short-term and long-term capital gains—both are taxed at this flat rate

Example (from illustrative scenario):

  • If the $450,000 gain exceeds the federal exclusion (due to non-qualification), Georgia taxes the gain at approximately 5.75% (highest bracket within the income tiers) → ~$25,875 state tax

4. Combined Tax Impact

Scenario A: Home qualifies for federal exclusion

  • Gain: $450,000 → fully excluded federally

  • State tax: Because of the federal exclusion, Georgia also treats the gain as excluded → $0 in state capital gains tax

Scenario B: Gain exceeds exclusion (or disqualifies)

  • Gain: $600,000 (assuming full gain is taxable)

  • Federal tax: Long-term capital gains rate (15%–20%) plus possible NIIT

  • Georgia state tax: ~5.49% (or up to 5.75% depending on bracket) on the gain

5. Tax Planning Strategies for Homeowners

  • Meet the primary residence requirement: Own and use the home for at least 2 of the last 5 years to qualify for federal exclusion.

  • Optimize timing: Try to sell in years when you qualify for lower federal long-term gains rates.

  • Use tax-advantaged vehicles: Retirement accounts, such as IRAs or 401(k)s, may help reduce liabilities from other capital gains

  • Offset gains with losses: Use tax-loss harvesting strategies to lower overall taxable income

  • Consider 1031 Exchanges for investment properties—not applicable to primary residences—to defer capital gains by reinvesting in like-kind property