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What it actually costs to sell, and what you'll owe on the way out
Two separate bills show up at closing: the cost of selling, and — if it was ever a rental — the tax on the gain, including the recapture piece that survives every exclusion.
Selling a house triggers two separate deductions from what a seller might assume they're walking away with, and they're easy to conflate into one vague sense that 'selling costs money.' The first is the direct cost of the transaction itself: commission and fees. The second, and only if the property was ever a rental, is tax on the gain — and it has a piece that survives every exclusion a seller might otherwise qualify for.
The transaction cost, in specifics
Agent commission runs roughly 6% of the sale price nationally, typically split between the listing and buyer's agents — and it's negotiable in every state, more so since a series of 2024 industry settlements changed how buyer-agent compensation is disclosed. On top of commission, a second layer — title insurance, escrow fees, transfer taxes, and the repair credits buyers routinely negotiate — usually adds another 2-3%. All-in, budgeting 8-9% of the sale price for the cost of selling is a realistic planning number, not a pessimistic one.
On the reference deal, an 8.5% total selling cost on a $315,000 sale is roughly $26,800 before the existing $118,000 mortgage is even paid off — a number worth knowing well before a seller lists, not after an offer is already accepted.
The second bill: tax on the gain, if it was a rental
If the property was ever rented out, selling triggers depreciation recapture — tax on every dollar of depreciation claimed (or that could have been claimed), at a flat 25% federal ceiling — plus ordinary long-term capital-gains tax on the rest of the profit, plus a possible 3.8% net investment income tax, plus whatever the state charges.
Watch out — Recapture doesn't care about the §121 exclusion
The §121 primary-residence exclusion (up to $250,000 single, $500,000 married filing jointly) can shelter a large chunk of ordinary capital gain — but it never reaches depreciation recapture, and recapture is calculated first, ahead of the exclusion touching anything. A property that qualifies for the full personal-residence exclusion because the owner lived there for the required two of the last five years can still generate a real, separate tax bill for any period it was rented out along the way.
Put the two bills together and 'net proceeds' on a former rental can end up substantially lower than sale price minus mortgage payoff — commission and fees come off first, then whatever federal and state tax the gain generates. Running both calculations before listing, rather than after an offer arrives, is the difference between a number you can plan around and one that surprises you at the closing table.
Run it yourself
Check yourself
1. Why is a naive comparison of 'mortgage payment vs. rent check' the wrong way to decide whether to buy?
2. What's the single biggest cost most sellers underestimate when they sell a house?
3. Why does depreciation recapture still apply even when a rental converts to (or was) a primary residence eligible for the §121 exclusion?