Often no, sometimes yes. The sellers who do owe usually find out at filing, months after the payment was due. Nothing is withheld when a house sells, so if your gain clears the $250,000 exclusion ($500,000 for joint filers), the IRS expects an estimated payment by the quarterly deadline that follows your closing date, not at filing time. Here is how to tell which group you are in.
First, the exclusion
If the home was your main residence for at least 2 of the last 5 years, you can exclude up to $250,000 of gain ($500,000 filing jointly) from tax entirely. Most home sales end here, with nothing owed and, if the full gain is excluded, usually nothing to report.
Gain means sale price minus what you paid minus improvements over the years and selling costs, not the size of the check at closing and not the equity you walked away with. Paying off a mortgage has no effect on the taxable number. Second homes and rentals get no exclusion at all, and rentals add depreciation recapture on top.
Gain above the exclusion is a capital gain
Whatever clears the exclusion is a long-term capital gain, taxed at the 0/15/20% rates, plus the 3.8% net investment income tax for higher incomes and state tax in most states. A couple with $700,000 of gain excludes $500,000 and pays capital gains rates on $200,000, commonly $30,000 to $50,000 all-in. The capital gains calculator calculates the federal part.
Why the tax is due before April
No one withholds tax on a home sale. If the tax on your gain will leave you owing $1,000 or more at filing, the quarterly estimated tax rules apply, and the installment for the quarter of the sale comes due at the next quarterly deadline. Wait until April and the underpayment penalty accrues as interest from that missed date.
You have two ways to handle it. The safe harbor rule does not depend on the sale at all. Pay 100% or 110% of last year's tax through the year and no penalty can apply, and you settle the gain at filing. Or the annualized method matches payments to when income actually arrived, so a September sale owes nothing extra in the April and June installments. For a one-time spike late in the year, the annualized method is the one to use.
Sold this year? Get the payment that covers it
Enter the gain and your other income and see both methods side by side, with the lower of the two picked for you.
Sources: IRS Publication 523 · IRS Publication 505