New Hampshire has no state capital gains tax on the sale of your home. There is no state income tax on wages, no state tax on home-sale profit, and as of January 1, 2025 the state's last toehold — the Interest & Dividends tax — was fully repealed. When you sell a house in New Hampshire, the state taxes the transaction (through the real estate transfer tax under RSA 78-B) but not the gain. The catch is the word "state": federal capital gains rules still apply in full, and they're where all the real planning happens. This guide covers the 2026 rules our sellers actually need — the IRC §121 primary-residence exclusion with worked examples, what counts toward your cost basis, the very different treatment of second homes and ski condos, and inherited property.
One framing note before the details: we're a real estate brokerage, not a tax firm. Our team sells homes across the Lakes Region, Pemi Valley, and White Mountains from our Campton and Plymouth offices — and every March, after tax appointments, the phones bring a fresh round of "what would we owe if we sold?" calls. We see how these rules play out at closing tables in Grafton County week after week, but tax law changes and every situation differs, so confirm your specifics with a CPA or tax attorney before you rely on any number here.
In this guide
- Does NH have a capital gains tax? No — here's what that means
- The federal §121 primary-residence exclusion, with examples
- Basis and improvements: paperwork that shrinks your gain
- Second homes and ski condos: no exclusion, different math
- Inherited property and the stepped-up basis
- Every tax that touches an NH home sale
- Record-keeping and when to bring in a CPA
- Frequently asked questions
Key takeaways
- New Hampshire charges no state tax on home-sale gains, and the Interest & Dividends tax was fully repealed effective January 1, 2025.
- Federally, IRC §121 excludes up to $250,000 of gain for single filers and $500,000 for married couples filing jointly on a primary residence owned and occupied 2 of the last 5 years.
- Second homes and ski condos get no §121 exclusion — the full gain is taxed at federal long-term capital gains rates of 0%, 15%, or 20%, plus a possible 3.8% net investment income tax.
- Inherited property receives a stepped-up basis under IRC §1014, which usually erases most of the gain if you sell soon after death; NH has no inheritance or estate tax.
- The NH real estate transfer tax ($0.75 per $100 from the seller under RSA 78-B) applies to every sale regardless of profit.
Does New Hampshire have a capital gains tax? No — here's what that means
New Hampshire is one of the handful of states with no broad-based income tax, which means the gain on your home sale owes nothing to Concord. For years there was one asterisk: the 3–5% Interest & Dividends tax, which never touched home-sale gains directly but caught investment income. That tax was phased down and fully repealed effective January 1, 2025, so as of 2026 the asterisk is gone too. New Hampshire also has no inheritance tax and no estate tax. This is a genuine advantage over neighboring states — and a wrinkle for nonresidents: if you live in Massachusetts and sell a New Hampshire property, Massachusetts taxes its residents' capital gains wherever the property sits. We sell to and for a lot of Massachusetts owners, and that state-of-residence question belongs on your CPA's desk early.
What New Hampshire does charge on a sale is the real estate transfer tax under RSA 78-B: $1.50 per $100 of the sale price, split evenly between buyer and seller ($0.75 per $100 each). On a $535,000 sale, the seller's half is $4,012.50. It's a tax on the transfer itself, owed regardless of whether you made a dime of profit — so don't confuse "no capital gains tax" with "no tax at closing." Our guide to seller closing costs in New Hampshire breaks down that side of the ledger line by line, with worked examples at three price points.
Federal rules: the §121 primary-residence exclusion
For most homeowners, the federal story is dominated by one generous provision: Section 121 of the Internal Revenue Code lets you exclude up to $250,000 of gain if you file single, or $500,000 if you're married filing jointly, on the sale of your primary residence. To qualify, you generally must have owned and lived in the home as your main residence for at least 2 of the 5 years before the sale (the two years don't need to be consecutive), and not have used the exclusion on another sale within the prior two years.
Two worked examples at different gain levels make it concrete:
Example 1: gain fully covered by the exclusion
A Plymouth couple bought their home for $310,000 in 2015, added a $40,000 addition, and sells in 2026 for $560,000. Adjusted basis: $310,000 + $40,000 = $350,000. Gain: $560,000 − $350,000 = $210,000. Married filing jointly, their $500,000 exclusion covers it entirely. Federal capital gains tax owed: zero — and nothing to New Hampshire either.
Example 2: gain that exceeds the exclusion
A single seller bought a Lakes Region home decades ago for $120,000, put $80,000 of documented improvements in over the years, and sells for $700,000. Adjusted basis: $200,000. Gain: $700,000 − $200,000 = $500,000 (before subtracting selling costs, which would reduce it further). The $250,000 single-filer exclusion covers half; the remaining $250,000 is taxed at federal long-term capital gains rates — at the common 15% bracket, that's $37,500, and a high-income seller could face the 20% rate plus the 3.8% net investment income tax (another $9,500 on this gain). The spread between those outcomes is exactly why the basis records in the next section matter.
Partial exclusions can apply if you sell before hitting two years because of a work move, health issue, or certain other qualifying circumstances — that's squarely CPA territory. And note the exclusion applies to your main home only; the ski condo and the lake cottage play by different rules below.
Basis and improvements: the paperwork that shrinks your gain
Your taxable gain isn't sale price minus purchase price — it's sale price minus your adjusted cost basis, and building that basis correctly is the cheapest tax planning there is. Basis starts with what you paid, plus most of your original closing costs, plus capital improvements: the new roof, the addition, the septic replacement, the kitchen renovation, the standby generator, the dock. Repairs and maintenance (painting, fixing a leak, servicing the furnace) don't count; improvements that add value or extend the property's life do. Selling costs — including commission and your $0.75-per-$100 half of the transfer tax — also reduce the gain.
The practical advice we give every long-term owner: keep a folder (paper or digital) with invoices for every improvement, going back to the day you bought. In a state where many owners have held their homes for twenty or thirty years of strong appreciation, tens of thousands of dollars of documented improvements can be the difference between fitting under the §121 exclusion and writing a check to the IRS. If the records are thin, reconstruct what you can — and here's a genuinely useful local trick: building permits are public records at the town office, so a morning at the Campton or Thornton town hall can document that 2009 addition your contractor's long-gone business never invoiced cleanly. Pair permits with bank statements and let your CPA judge what's supportable. And since the whole calculation is anchored to sale price, pin that down early with a free professional home valuation.
Second homes and ski condos: no exclusion, different math
This is the section for a large share of our sellers, because vacation property is our home turf — Waterville Valley condos, Lakes Region cottages, White Mountains getaways. The rule is simple and unforgiving: the §121 exclusion does not apply to a second home. Your entire gain — sale price minus adjusted basis minus selling costs — is taxable at federal long-term capital gains rates if you've owned it more than a year: 0%, 15%, or 20% depending on your income, with most sellers landing at 15%. Higher earners may also owe the 3.8% net investment income tax (NIIT) on top. Own it a year or less and the gain is taxed as ordinary income instead.
A worked example: a couple bought a Waterville Valley condo in 2012 for $220,000, put in $30,000 of improvements, and sells in 2026 for $480,000 with $30,000 of selling costs. Taxable gain: $480,000 − $250,000 − $30,000 = $200,000. At 15%, that's $30,000 of federal tax — and if their income triggers NIIT, another $7,600. No New Hampshire tax on any of it, but the federal bill is real and should be in your net-proceeds math from day one.
If the property has been rented, one more federal layer applies: depreciation recapture. Depreciation you claimed — or were entitled to claim — while renting is taxed at sale at up to 25% (unrecaptured Section 1250 gain), separate from the regular capital gains rates. We operate vacation rentals locally as well as selling them, so we see both sides of this: the depreciation that shelters rental income during ownership comes back onto the table when you sell, and the Meals & Rentals tax (8.5% on stays under 185 days) you collected along the way is an operating tax, not a sale tax — but your rental records, including the depreciation schedules, are exactly what your CPA will ask for at listing time.
Three planning notes for second-home owners. First, if the property has been a true rental/investment property, a 1031 exchange can defer the gain by rolling into another investment property — but 1031 is not available for personal-use homes, and mixed-use situations are strictly professional-advice territory. Second, some owners convert a second home to a primary residence before selling; the rules prorate the exclusion for prior "nonqualified use," so the benefit is smaller than people hope — again, CPA territory. Third, if you've been watching the January 2026 legislative proposals (reported by NHPR) to add a property-tax surcharge on higher-value second homes and short-term rentals: those are proposals, not law, but they're prompting a lot of "should we sell?" conversations in our market. Our guide to selling a lake house or second home in NH goes deeper, and our short-term rental analysis can help you weigh holding versus selling with real numbers.
Inherited property: the stepped-up basis
If you inherited the property, the tax picture is usually far friendlier than heirs fear. Inherited real estate receives a stepped-up basis under IRC §1014: your cost basis resets to the property's fair market value at the date of death, not what the deceased paid decades ago. Sell reasonably soon after inheriting and the taxable gain is often minimal — the appreciation from 1985 to the date of death simply never gets taxed as capital gain. New Hampshire adds no inheritance or estate tax of its own.
The moving parts for inherited property are usually probate mechanics rather than capital gains: NH probate (Circuit Court Probate Division) commonly runs 6–12 months, and the executor may need a license to sell from the court unless the will grants a power of sale. Get a date-of-death value documented — an appraisal or a broker price opinion; a professional valuation is the natural starting point — because it's the number your basis hangs on. Our guide to selling an inherited house in New Hampshire walks through the whole process, including the out-of-state-heir logistics we handle constantly in a vacation market, and a NH probate attorney should confirm your authority to sell before you list.
Taxes on selling a house in NH: what you'll actually deal with
| Tax | Applies in NH? | Notes |
|---|---|---|
| NH capital gains tax | No | No state income tax; I&D tax fully repealed effective 1/1/2025 |
| Federal capital gains tax | Yes | IRC §121 exclusion may cover a primary residence; 0/15/20% LTCG rates otherwise, possible 3.8% NIIT |
| Depreciation recapture (if ever rented) | Yes (federal) | Claimed depreciation taxed at up to 25% at sale (unrecaptured §1250 gain) |
| NH real estate transfer tax | Yes | $0.75 per $100 from the seller (and the same from the buyer) under RSA 78-B, regardless of profit |
| Prorated property taxes | Yes | Your share of the town bill through closing — a closing cost, not a gains tax |
| NH inheritance / estate tax | No | None; inherited property also gets a federal stepped-up basis under IRC §1014 |
| Home-state income tax for nonresidents | Possibly | Your state of residence (e.g., Massachusetts) may tax the gain even though NH doesn't |
Record-keeping and when to bring in a CPA
Whatever your situation, three habits pay for themselves: keep every improvement invoice for as long as you own the home; keep your closing statements from both purchase and sale; and if the property was ever rented, keep the depreciation schedules — depreciation you took, or could have taken, gets recaptured at sale, a detail that surprises casual landlords every spring.
Bring in a CPA before listing — not at tax time — if any of these apply: your gain may exceed the §121 exclusion; the property is a second home, rental, or mixed-use; you're weighing a 1031 exchange; you inherited the property or hold it in a trust or LLC; or you're a nonresident selling NH property with tax obligations back in your home state. An hour of planning beforehand routinely saves multiples of its cost, and rules change year to year.
Frequently asked questions
Does New Hampshire have a capital gains tax?
No. New Hampshire has no state income tax and no state capital gains tax, and the Interest & Dividends tax was fully repealed effective January 1, 2025. Federal capital gains tax still applies to home-sale gains not covered by the §121 exclusion.
How much is capital gains tax on a home sale in New Hampshire?
State: zero. Federal: on a primary residence, up to $250,000 of gain (single) or $500,000 (married filing jointly) is excluded under IRC §121 if you owned and lived in the home 2 of the last 5 years; gain beyond that — and all gain on second homes — is taxed at 0%, 15%, or 20% depending on income, plus a possible 3.8% NIIT for high earners.
How do I avoid capital gains tax when selling my house in New Hampshire?
Use the levers the code actually gives you: qualify for the §121 exclusion by owning and living in the home 2 of the last 5 years; document every capital improvement to raise your basis; subtract selling costs like commission and your half of the transfer tax; and for genuine investment property, consider a 1031 exchange. There is no way around the NH transfer tax, which applies regardless of profit.
Do I pay capital gains tax when selling a second home or ski condo in NH?
There's no NH tax, but federally, yes: second homes get no §121 exclusion, so the full gain above your adjusted basis is taxed at long-term capital gains rates (if held over a year), and any depreciation claimed while renting is recaptured at up to 25%. A 1031 exchange can defer tax for genuine investment/rental property, but not for personal-use homes.
What taxes do I pay when selling a house in NH?
At closing: the NH real estate transfer tax ($0.75 per $100 of price from the seller under RSA 78-B) and your prorated property taxes. After the sale: federal capital gains tax on any gain not covered by an exclusion. There is no NH state tax on the gain itself.
Do I pay capital gains on an inherited house in New Hampshire?
Usually little or none if you sell soon after inheriting, because inherited property gets a stepped-up basis under IRC §1014 to its value at the date of death. NH has no inheritance or estate tax. Document the date-of-death value and confirm the details with a CPA and probate attorney.
Start with the number everything depends on
Every calculation on this page starts with your sale price — and that's the one input we can help you pin down today. Get a free professional home valuation and we'll pair it with a realistic net sheet: transfer tax, closing costs, commission options, and where the federal exclusion likely leaves you. Then see the full picture in our NH Seller Guide, check where the 2026 market stands, or talk with our team about timing your sale. For the tax return itself, loop in your CPA — we'll happily work alongside them.
This guide is general information for New Hampshire home sellers, not tax or legal advice. Rules change — confirm the specifics of your situation with your CPA and your closing attorney.
Sources and further reading
- IRS Topic No. 701 — Sale of Your Home (§121 exclusion)
- IRS Publication 523 — Selling Your Home (basis, improvements, exclusion rules)
- McLane Middleton — Real Estate Tax Considerations in New Hampshire
- NH RSA Chapter 78-B — Tax on Transfer of Real Property
- NH Department of Revenue Administration — Real Estate Transfer Tax FAQ
- NHPR — Proposed NH tax on second homes and vacation rentals (Jan 2026)