Do You Have to Pay Taxes When You Sell a Home in Colorado Springs?

Do You Have to Pay Taxes When You Sell a Home in Colorado Springs?

Selling a home can be exciting—especially in a market like Colorado Springs, where values have grown steadily over the years. But before you start celebrating the proceeds from your sale, it’s important to understand what happens next from a tax standpoint. Whether you’re a homeowner, downsizer, or real estate investor, there may be tax implications when you sell a property—and knowing what they are helps you make smarter, more confident decisions.

The good news? Not all home sales trigger a big tax bill. In fact, many homeowners qualify for exclusions, deferrals, or strategic timing that can keep more of your profit in your pocket. The key is understanding how the IRS looks at your sale—and preparing ahead of time so there are no surprises.

For homeowners selling their primary residence, the Home Sale Exclusion is one of the biggest benefits available. If you’ve lived in your home for at least two of the past five years, you can exclude up to $250,000 in capital gains if you’re single—and up to $500,000 if you’re married filing jointly. That means you can often walk away with a substantial tax-free profit, as long as you meet the residency and ownership tests.

This exclusion can be especially meaningful in Colorado Springs neighborhoods that have appreciated quickly—places like Briargate, Flying Horse, and Northgate. Many longtime homeowners are surprised to find that even after years of appreciation, their sale still falls comfortably under the IRS exclusion limits.

For investors, the picture looks a bit different. When you sell a rental or investment property, the IRS typically views your gain as taxable income. However, that doesn’t mean you’re out of options. Many smart investors in Colorado Springs and across the country use tools like the 1031 Exchange to defer capital gains taxes. By rolling the proceeds from one investment property into another “like-kind” property within specific timelines, you can postpone taxes and keep your money working for you.

Weldon Hobbs of Team Hobbs Realty often helps investors coordinate 1031 Exchange sales by connecting them with qualified intermediaries and trusted tax professionals. His background in finance and project management means he’s fluent in the details—helping clients time their sale, identify replacement properties, and stay compliant without missing deadlines.

For homeowners who have used part of their home as a rental, office, or short-term vacation space, things can get a little more nuanced. In those cases, it’s important to determine which parts of your home qualify as your “primary residence” and which don’t. Weldon can help you clarify what to ask your CPA, ensuring your final tax filing accurately reflects your usage and intent.

Sometimes, the right answer isn’t just about the tax you’ll owe—it’s about the bigger picture of your life, wealth, and real estate strategy. For downsizers, selling as part of a long-term retirement or relocation plan might open the door to other opportunities, like reinvesting in lower-maintenance properties or diversifying into other markets. For investors, it may be about freeing up capital for a new phase of growth.

That’s why Weldon and Kristen Hobbs approach every home sale as a partnership—not just a transaction. With Weldon leading strategy and Kristen providing the design and presentation expertise through InspiredWhims Design, Team Hobbs Realty helps you align your property decisions with your financial goals. Their focus is clarity first, so you understand not only how to sell—but how the sale fits into your larger financial story.

Taxes don’t have to be intimidating when you’re prepared. The smartest moves usually happen before the sale, not after. That’s why Weldon encourages every client to review their scenario with a qualified CPA or tax advisor early in the process. And when you do, Team Hobbs Realty has a network of trusted professionals—CPAs, 1031 specialists, and estate planners—ready to help you navigate the details with confidence.

If you’re selling a home or investment property in Colorado Springs and wondering what your tax exposure might look like, you don’t need to guess. Weldon has created a series of simple, easy-to-read guides that explain tax-related concepts for investors, downsizers, and families going through life transitions. These resources help you understand your options before you make a move, so you can plan with confidence and peace of mind.

No matter your reason for selling—downsizing, retiring, relocating, or reinvesting—knowing the tax side of your transaction helps you protect what you’ve built. And that’s what Weldon and Team Hobbs Realty specialize in: helping you make well-informed, strategic choices that support your larger goals in life and wealth.If you’re facing a big decision like this, book a time on my calendar using the link below. It’s a no-pressure conversation designed to give you the clarity and confidence you need to make the right move. I’ll help you think through your options, connect you with trusted professionals if you need them, and make sure you have the right questions to ask—whether you decide to move forward now or later.