Do You Pay Capital Gains Tax When You Sell a Home in Maricopa AZ?

Updated July 2026

By James Sanson, REALTOR®. Licensed Arizona real estate agent since August 2002. Maricopa specialist since 2004. 1,000+ closings across resale, new construction, and investment-property transactions. See James Sanson and the team.

Published 2026-07-04. Last reviewed 2026-07-04.

Quick answer

Many Maricopa homeowners owe no capital gains tax when they sell, because federal law (IRC Section 121) lets a qualifying seller exclude up to $250,000 of gain, or $500,000 for a married couple filing jointly, on a primary residence. Gain above the exclusion is taxed at federal capital gains rates, and Arizona taxes it as income at a flat 2.5 percent with a 25 percent subtraction for long-term gains, as of publication. There is no separate City of Maricopa or Pinal County capital gains tax. This page is informational, not tax advice; confirm your numbers with a CPA.

On this page

1. Is there a City of Maricopa capital gains tax
2. How the federal home sale exclusion works
3. How Arizona taxes a home sale gain
4. How the taxable gain is actually calculated
5. Rentals, second homes, and inherited houses
6. Relocation, nonresident, and foreign seller cases
7. What to do before you sell

Sellers in Maricopa ask two versions of the same question: Do I have to pay taxes when I sell my house, and if so, how much? The honest answer is that for a large share of owner-occupants, the federal home sale exclusion wipes out the entire gain, and for everyone else, the math runs through two layers, federal capital gains rates and Arizona income tax. This page walks through both layers, the rental and inherited-home cases, where the rules change, and the situations that call for a professional before you list.

This page is informational, not tax or legal advice. Tax outcomes depend on your filing status, income, basis records, and how the property was used. For your specific situation, consult a CPA or an Arizona-licensed tax attorney. For the real estate side of the sale, call 520-838-8037 to talk with the James Sanson Team.

Is There a City of Maricopa Capital Gains Tax?

No. Neither the City of Maricopa nor Pinal County imposes its own capital gains tax. When you sell a home in 85138 or 85139, the gain is taxed at exactly two levels: federal, under the Internal Revenue Code, and state, under Arizona income tax law. A sale in Maricopa is treated the same as a sale anywhere else in Arizona for capital gains purposes.

How the Federal Home Sale Exclusion Works

Federal law, IRC Section 121, lets a qualifying seller exclude up to $250,000 of gain from the sale of a principal residence, or up to $500,000 for a married couple filing jointly. To qualify, you generally must have owned the home and used it as your main home for at least two of the five years before the sale, and not have used the exclusion on another sale in the two years before this one. The two years of ownership and use do not have to be continuous.

For most Maricopa owner-occupants, that exclusion covers the entire gain, which is why many sellers owe no federal capital gains tax at all. Gain above the exclusion is taxed at the federal long-term capital gains rates, which as of publication are 0, 15, or 20 percent depending on taxable income, and higher-income sellers may also owe the 3.8 percent net investment income tax on the portion above the exclusion. The income thresholds for those brackets adjust each year, so check the current IRS figures or ask your CPA rather than relying on a fixed table.

One myth worth retiring: there is no special over-55 one-time exclusion anymore. That older rule was replaced by the current Section 121 exclusion in 1997, and the current exclusion is available at any age and can be used repeatedly, subject to the two-year rule.

How Arizona Taxes a Home Sale Gain

Arizona starts its income tax calculation from your federal adjusted gross income. The federal Section 121 exclusion does not count toward your federal AGI, so Arizona does not tax it either. Gain above the exclusion, or gain on property that does not qualify, flows into Arizona taxable income.

As of publication, Arizona taxes individual income at a flat 2.5 percent under A.R.S. Section 43-1011. For net long-term capital gains, meaning assets held more than one year, Arizona allows a 25 percent subtraction under A.R.S. Section 43-1022, which brings the effective state rate on the taxed portion of a long-term gain below the flat rate. Beginning with the 2026 tax year, that subtraction applies to long-term gains regardless of when the asset was acquired; for tax years through 2025, it applied only to assets acquired after December 31, 2011. Sellers amending or reviewing a prior-year sale should keep the old rule in mind. Short-term gains, from property held one year or less, get no subtraction and are taxed at the full flat rate.

How the Taxable Gain Is Actually Calculated

Your gain is not the sale price minus what you paid. It is the amount you realize from the sale, which is the price minus selling costs such as real estate commissions and certain closing costs, minus your adjusted basis, which starts with what you paid and generally increases with qualifying capital improvements over the years. A new roof, an added room, or a pool installation can raise your basis; repairs and maintenance generally do not.

That means two Maricopa sellers with identical sale prices can have very different taxable gains, and it means your records matter. Keep improvement receipts, and get a clear picture of your selling costs before you estimate the gain. For what those selling costs actually look like in this market, see the cost to sell a home in Maricopa.

Rentals, Second Homes, and Inherited Houses

The Section 121 exclusion is for a principal residence. A rental, a second home, or a flip that never met the two-of-five-year use test does not qualify, so the gain is generally taxable in full at federal capital gains rates plus Arizona income tax. Rentals add one more layer: depreciation claimed during the rental years is generally recaptured and taxed at its own federal rate when you sell, which is a conversation to have with your CPA before you list, not after you close. If you are weighing that sale now, start with selling a rental with a tenant.

Inherited homes work differently, and usually in the heir's favor. Under federal law, inherited property generally receives a basis stepped up to its fair market value at the owner's death, so if you sell soon after inheriting, the taxable gain is often small or zero, even on a home the family owned for decades. Holding periods on inherited property are also treated as long-term. The details, including how the step-up interacts with community property and trusts, are best handled by a CPA or estate attorney. For the sale process itself, see selling an inherited house in Maricopa.

Relocation, Nonresident, and Foreign Seller Cases

If you sell before reaching two years of ownership and use due to a work relocation, certain health reasons, or other unforeseen circumstances as defined in the regulations, federal law may allow a partial exclusion, prorated for the time you did qualify. Sellers relocating out of Maricopa for a job should raise this with their CPA before assuming the whole gain is taxable.

Nonresidents of Arizona are taxed by Arizona on Arizona-source income, including gains from selling Arizona real estate, so moving out of state before closing does not remove the Arizona layer on a Maricopa sale. Foreign sellers face an additional federal withholding regime, FIRPTA under IRC Section 1445, which generally requires the buyer to withhold a percentage of the sale price at closing, subject to exceptions and reduced rates that a tax professional should confirm in advance.

What to Do Before You Sell

Before you list, do three things. Pull together your purchase records and improvement receipts so your basis is real, not guessed. Ask a CPA to run the federal and Arizona numbers for your filing status and income, especially if the gain may exceed the exclusion or the property was ever a rental. And get an accurate picture of your likely sale price and selling costs, because both feed the gain calculation; a proper market analysis does that, and the team prepares one at no cost.

Important. This page is informational, not tax or legal advice. Federal and Arizona tax law changes, income thresholds adjust each year, and eligibility for the Section 121 exclusion, the Arizona long-term gain subtraction, partial exclusions, and FIRPTA exceptions depend on facts specific to you. Figures and statute references are current as of publication. The James Sanson Team is a real estate team, not a CPA firm or law firm, and does not provide tax or legal advice. For your specific situation, consult a CPA or an Arizona-licensed attorney.

If you are planning a Maricopa sale and want the real estate side handled with the tax questions flagged early, call 520-838-8037 to talk with our Maricopa AZ specialists. James has sold Maricopa homes since 2004, including rentals, inherited properties, and relocation sales.

Last reviewed: July 4, 2026