Under the old rules, the new home had to be at least as expensive as the most expensive previous residence. Under the old rules, the in-spouse had to buy a new home years that was worth at least the entire sale price of the family home within two years. If he or she paid less, tax was owed on the difference. There are ways to avoid incurring a substantial capital gain other than selling your home at a price that is too low. Consider past and possible future increases in the basis.
Home improvements are the most common increase that occurs to a home's basis.
First, any improvement must remain with the home when it is sold. The same expense can't be claimed twice. For example, if you replace a water heater more than once, you may only add the cost of the latest expenditure to basis. You also have to distinguish between an improvement and a repair. A repair merely keeps your home in an ordinary and efficient operating condition.