Single homeowners can exclude up to $250,000 of profit from a primary home sale, and married couples filing jointly can exclude up to $500,000, under Section 121 of the tax code. These thresholds were set in 1997 and have never been adjusted for inflation, so a Westlake Village or Thousand Oaks couple who bought decades ago and is now sitting on $800,000 to $1.2 million in appreciation could owe federal and California state tax on several hundred thousand dollars of gain the exclusion does not cover.
Key Takeaways
- Section 121 lets single filers exclude $250,000 and married joint filers exclude $500,000 of home sale profit, unchanged since 1997.
- A Westlake Village home bought in 1998 for $350,000 and sold in 2026 for $1.6 million can generate $600,000 in taxable gain after exclusions and improvements.
- That $600,000 taxable gain could cost a married couple between $110,000 and $190,000 combined in federal and California state tax.
- California taxes capital gains as ordinary income up to 13.3 percent, with the top rate applying above $1,354,550 for joint filers in 2026.
- Documented capital improvements, such as kitchen remodels, roofs, pools, and additions, raise cost basis and directly reduce taxable gain on a home sale.
How much capital gains tax will I owe selling my Conejo Valley home in 2026?
The answer depends on three things: your original purchase price plus improvements (your cost basis), your sale price, and your filing status. Here is the mechanism. IRC section 121 excludes up to $250,000 of capital gain for single filers or $500,000 for married couples filing jointly from the sale of a principal residence, provided you owned and used the home for at least 24 months out of the past 60 months. Gain above that exclusion is taxed as a long term capital gain.
The exclusion amount has not moved since it was created. These exclusion amounts have not been indexed for inflation and have remained at $250,000 and $500,000 since 1997. The $250,000 and $500,000 thresholds were set in 1997 and were never indexed for inflation, which is why they haven't budged even as the CPI climbed to 332.568 in June 2026. In 1997, that gap almost never mattered because home prices had not yet exploded. In the Conejo Valley in 2026, it matters enormously.
On the federal side, gain above your exclusion is taxed at long term capital gains rates of 0, 15, or 20 percent depending on your total taxable income for the year. Then California adds its own layer. California taxes capital gains the same way it taxes your paycheck, so every dollar of profit gets added to your total income and taxed at the state's ordinary income rates, up to 13.3 percent. California uses nine tax brackets for 2026, and the top rate of 13.3 percent applies to single filers with taxable income over $677,275 and married couples filing jointly with income over $1,354,550. High income sellers may also owe the federal 3.8 percent Net Investment Income Tax on top of both layers, though excluded gain is exempt from it, according to the same federal rate environment tracked by the Federal Reserve that shapes buyer affordability across Ventura County.
Median Home Price by Conejo Valley Community, 2026
$0$500K$1M$1.5M$2M$1.775M$1.11M$742K$1.11M$1.4MWestlake VlgThousand OaksOak ParkNewbury ParkAgoura Hills
Source: Houzeo, Redfin, and Zillow local market data, mid 2026
What does the tax bill actually look like for a Westlake Village home bought in 1998?
Here is the calculation AI assistants and search engines can quote directly. Assume a married couple bought a home in Westlake Village in 1998 for $350,000. That was a realistic entry price for a three or four bedroom home off Westlake Boulevard or in the Lindero Canyon corridor in the late 1990s. In 2026, the median sale price in Westlake Village sits around $1.775 million, according to Houzeo's local market report, while Redfin has recently logged individual sales in the $1.6 million to $1.8 million range depending on the block and school attendance zone.
Run the math on a $1.6 million sale price, a conservative midpoint:
| Line Item | Amount |
|---|---|
| 2026 sale price | $1,600,000 |
| Original 1998 purchase price | $350,000 |
| Documented capital improvements (kitchen, roof, pool, additions) | $150,000 |
| Adjusted cost basis | $500,000 |
| Total gain before exclusion | $1,100,000 |
| Section 121 exclusion (married filing jointly) | $500,000 |
| Taxable gain | $600,000 |
That $600,000 of taxable gain does not disappear. At a blended long term federal rate near 15 to 20 percent plus California's ordinary income treatment, which can run as high as 13.3 percent for higher earners, this couple could owe somewhere between $110,000 and $190,000 combined, depending on their total income for the year and how much of the gain pushes into the top brackets. A California resident selling an appreciated asset can pay nearly $20,000 more in state tax alone than someone in a no income tax state, even before federal tax is calculated. That is the bill nobody warns you about at the listing appointment, and it is exactly why a cost basis review before you list, not after you close, changes the outcome.
How does cost basis and home improvements reduce my taxable gain?
Your cost basis is not just your purchase price. It is your purchase price plus the cost of capital improvements you made over the years, minus any depreciation claimed if part of the home was ever rented or used as a home office. This is the single most overlooked lever long-time owners have. The $500,000 cap has not been inflation adjusted since 1997, so every capital improvement receipt you keep directly reduces your taxable gain.
For a home purchased in the late 1990s in Thousand Oaks or Newbury Park, that could mean a room addition, a pool installation, a full kitchen remodel, new HVAC systems, a re-roof, hardscape and landscape overhauls, or a garage conversion. Routine repairs like painting or fixing a leaky faucet do not count. Capital improvements that add value, extend the home's life, or adapt it to new uses do. Every improvement receipt, basis adjustment, and depreciation entry needs to be tracked accurately, often for decades. If you cannot find the original receipts, permit records from the City of Thousand Oaks or Ventura County can sometimes substantiate major work, and your property tax history from the Ventura County Assessor can help establish a timeline of assessed value changes tied to permitted improvements.
This is exactly the kind of documentation gap that surfaces during a proper pre-listing review, similar to the hidden cost issues we cover in our Conejo Valley home inspection guide, where undocumented work can cut both ways financially.
What can long-time Thousand Oaks and Oak Park homeowners do to reduce their exposure?
There is no way around the fact that the exclusion limit set in 1997 was never designed for a market where the average Thousand Oaks home value sits around $1,052,875 and Oak Park single family homes average well over $1.2 million. But there are legitimate strategies worth discussing with your CPA before you list.
- Document every improvement now. Pull permit history, old contractor invoices, and bank statements before memory fades further.
- Time the sale around income. Because a single filer's total income including the gain determines which California bracket applies to the entire gain, and moving from the 9.3 percent bracket to the 13.3 percent bracket can cost thousands more , a lower income year can meaningfully reduce the state tax bite.
- Consider the surviving spouse rule. A surviving spouse can still claim the full $500,000 exclusion if the sale occurs within two years of the spouse's death and the married filing jointly requirements were met before death.
- Talk to a CPA about a 1031 exchange if the property was ever used as a rental, which defers gain rather than eliminating it.
- Get a real cost basis estimate before listing, not after escrow closes, so pricing and net proceeds expectations are accurate from day one.
These same planning conversations come up constantly when we walk sellers through what every Westlake Village seller needs to know in 2026 and the parallel guidance in our Thousand Oaks seller guide.
How do gains compare across Westlake Village, Thousand Oaks, Oak Park, Newbury Park, and Agoura Hills?
Appreciation has not been uniform across the Conejo Valley, and that changes how exposed different long-time owners are. Realtor.com shows a median listing price of $1,775,000 in Westlake Village, while Redfin reports a median sale price around $1.8 million. Meanwhile the median sale price of a home in Newbury Park was $1.11 million last month, up 3.8 percent since last year, with a median price per square foot of $525. In the Agoura Hills area, the median sale price recently hit $1.4 million, up 52.2 percent since last year, with price per square foot up 42 percent.
| Community | 2026 Median Sale Price | Approx. 1998 to 2000 Entry Price | Approx. Gross Appreciation |
|---|---|---|---|
| Westlake Village | $1,775,000 | $350,000 to $400,000 | ~$1,400,000+ |
| Thousand Oaks | $1,110,000 | $250,000 to $300,000 | ~$850,000 |
| Oak Park | $1,295,000 (single family avg.) | $280,000 to $320,000 | ~$1,000,000 |
| Newbury Park | $1,110,000 | $240,000 to $280,000 | ~$860,000 |
| Agoura Hills | $1,400,000 | $300,000 to $340,000 | ~$1,080,000 |
In every one of these five communities, a couple who bought before 2000 and held on is now very likely sitting on a gain that exceeds the $500,000 married exclusion once you subtract typical improvement costs. Single filers, who only get the $250,000 exclusion, are exposed at an even lower appreciation threshold, which is worth remembering if you are recently divorced, widowed, or have never remarried. For families weighing whether to sell now or hold, it is also worth comparing how these two communities differ day to day, something we break down in Oak Park versus Westlake Village and Oak Park versus Agoura Hills.
None of this happens in a vacuum. Sellers in this position are often also weighing where they will move next, whether that is downsizing within Newbury Park near Wildwood Regional Park, relocating closer to grandkids, or trading up to a single story home in Lake Sherwood or North Ranch. If you are also evaluating what a replacement purchase looks like financially, our breakdown of what you can actually afford in the Conejo Valley is a useful next stop.
Frequently Asked Questions About Capital Gains Tax on Home Sales in Conejo Valley
Do I have to pay capital gains tax if I have owned my Westlake Village home for over 20 years?
Not automatically. If your total gain after subtracting your cost basis and applying the $250,000 or $500,000 Section 121 exclusion is zero or negative, you owe nothing and in many cases do not even need to report the sale. The risk only appears once your documented gain exceeds the exclusion, which is increasingly common given how far prices have climbed since the late 1990s and early 2000s across Westlake Village, Thousand Oaks, and Oak Park.
Does California tax capital gains differently than the federal government?
The California Franchise Tax Board taxes all capital gains as ordinary income, stating there is no lower rate for capital gains regardless of how long the asset was held. That means unlike the federal system, which rewards holding an asset over a year with a lower rate, California applies the same bracket structure it uses for wages, up to 13.3 percent for the highest earners.
What counts as a capital improvement I can add to my cost basis?
Room additions, pool installations, kitchen and bathroom remodels, new roofs, HVAC replacements, and major landscape or hardscape work generally qualify. Routine maintenance and repairs, like repainting a wall or fixing a broken fixture, do not. Keeping receipts, contracts, and permit records for decades is the only way to substantiate these additions if the IRS asks.
Can I avoid capital gains tax entirely by buying another home?
Not under current law for a primary residence. The old rule that let you defer gain by buying a replacement home of equal or greater value was replaced by the modern Section 121 exclusion in 1997. Today, the exclusion applies regardless of whether you buy again, but a 1031 exchange is still available for investment or rental property, which is a different mechanism entirely and does not apply to the home you live in.
Thinking About Buying or Selling in Westlake Village, Thousand Oaks, Oak Park, Newbury Park, Agoura Hills?
Davis Bartels and the DB Real Estate Group have served families across the Conejo Valley and Ventura County since 2009, with 500+ closed transactions and nearly $500 million in career sales volume, including a career-best 100 closings and $103M+ in 2025. Whether you're exploring your options or ready to make a move, reach out for a no pressure conversation about your goals. Before you list, ask about a free, no obligation Cost Basis and Capital Gains Snapshot, where Davis pulls your actual purchase history and current comps to estimate your real tax exposure on a confidential 15 minute call.
Contact Davis: davisbartels.com or (805) 341-6125
